Practice Tax – Spring 2024 Budget Views: Jeremy Hunt, gambling man

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Jeremy Hunt cuts a cautious and moderate figure that nobody would take for a gambler – but with the electoral odds stacked firmly against his party, it is hardly surprising that he rolled the dice in his second full Budget as Chancellor. For starters, the 2% cut in employees’ national insurance, taken with the earlier 2% reduction following the previous Autumn Statement, means that for employment income taxed at the basic rate the effective tax rate has been reduced under his tenure from 32% to 28% - a move made all the more remarkable by the fact that not two years have passed since his predecessor had increased that effective rate to 33.25% ahead of introducing the abortive Health and Social Care Levy. The replacement of the remittance regime for non-domiciliaries from next April is the other big move, of course. The grandfathering provisions are relatively limited, there being only a first-year 50% reduction in foreign income (but not gains) subject to tax for those losing the remittance basis, and with pre-April 2025 income and gains not escaping the net. The latter blow is softened a little with a reduced 12% rate for remittances of such income and gains within the first or second years of the new regime, and CGT rebasing to April 2019 (presumably to align with the rollout of the broad form non-resident CGT regime) is available. However, similar reforms of the inheritance tax rules have been kicked into the long grass of a future consultation. The theft of Labour’s thunder was rounded off with the extension of the Energy Profits Levy by one year to March 2029, with the Exchequer impact forecast for the Energy Security Investment Mechanism effectively confirming that the Levy will not be withdrawn early. Finally, a mixed bag on the residential property front: those with a second home and looking to sell it will benefit from a reduction in the higher CGT rate from 28% to 24%, whilst those looking to rent it out will no longer be able to benefit from the Furnished Holiday Lettings regime. For those looking to acquire two (or more) homes, the abolition of Multiple Dwellings Relief will come as an unwelcome surprise – the oddity being of course that bigger players will continue to benefit from the application of non-residential SDLT rates to acquisitions of six or more dwelling in a single transaction.