Spring Budgets in an election year tend to be a balance of speaking to the wider public and placating the party faithful. In setting out a swath of considered tax cuts, the UK Chancellor has certainly played to form.

From slashing another 2% off National Insurance Contributions, an extension to child benefit, the freezing of alcohol and fuel duty and an increase in the VAT registration threshold, the Chancellor has lent a hand to struggling households with a boost to disposable incomes. The cuts will certainly be welcome and will go some way in making up for the erosion of real incomes which has occurred in recent years as a result of the inflationary environment.

The Office for Budget Responsibility’s (OBR) forecast suggests that cost pressures may be less of an issue in the coming months predicting that inflation will fall to 2% by next month, pared back significantly from the 8% projection this time last year.

The OBR also delivered more good news in the form of higher-than-expected growth forecasts, all of which helped convince the Chancellor that the UK economy was beginning to turn a corner and it was an appropriate time to make further tax cuts for working people in particular.

Our KPMG Belfast team have prepared an overview of the main tax items in today’s Budget affecting both individuals and businesses, all of which have application in Northern Ireland unless indicated otherwise. 

Some changes of note include:

  • National Insurance Contributions to fall by 2% to 8% for employees, a move which follows the 2% cut announced in the Autumn Statement.
  • The top rate of capital gains tax will be cut to 24% from 28% for disposals of any residential property, other than a home.
  • The non-domiciled tax regime will be scrapped with effect from April 2025 and replaced with a new residence-based regime.
  • Significant future changes to the scope of UK inheritance tax have been sign posted.
  • The threshold for VAT registration will climb to £90,000 from £85,000.

Impacts for Northern Ireland

Turning our attention back locally, the Chancellor announced that Northern Ireland would be allocated an additional £100m of resources from HM Treasury.

Our dual market access to both the European Union and UK markets afforded under the Windsor Framework has already piqued the interest of global investors who have noted the return of stable government to Stormont with interest.

Coupled with the potential to devolve corporation tax-setting powers to The Executive – recently reaffirmed by the UK government – and a range of transformational city deals, these factors combined offer a very compelling investment proposition in Northern Ireland.

The tax changes announced in today’s Budget should go some way to improving that attractiveness further.

Personal taxes

Though well trailed, the Chancellor today formally announced several fundamental reforms to the taxation of non-domiciled individuals including the abolition of the remittance basis.

The Chancellor has also indicated significant future changes to the scope of UK inheritance tax.

The combination of these will impact on many individuals currently resident in the UK.

Taxation of non-domiciled individuals

A key Labour tax policy has been to abolish the “non-dom” tax regime if they win a general election. However, the Conservatives have taken the initiative and announced today, that from 6 April 2025, the existing non-dom regime with be replaced with a new relief on foreign income and gains [FIG] which will be available for the first four years of UK tax residence. To qualify for relief the individual must not have been UK tax resident in the previous ten years prior to becoming UK resident.

The new regime allows FIG arising in the first four years to be remitted with no additional UK taxes.

Individuals who on 6 April 2025 have been tax resident in the UK for less than four years (after ten years of non-UK tax residence) will be able to use the new regime for the remainder of those four years.

Individuals who move from the remittance basis to the arising basis on 6 April 2025 and are not eligible for the new four-year FIG regime will, for 2025-2026 only, pay tax on 50% of their foreign income. This reduction applies to foreign income only; it does not apply to foreign chargeable gains. For 2026-27 onwards, tax will be due on all worldwide income in the normal way.

From 6 April 2025, individuals who have been taxed on the remittance basis will be able to elect to pay tax at a reduced rate of 12% on remittances of pre-6 April 2025 FIG under a new Temporary Repatriation Facility (TRF) that will be available for tax years 2025-26 and 2026-27 only. The TRF will not apply to pre-6 April 2025 FIG generated within offshore trust structures.

From 6 April 2025, an individual who is not, or who later ceases to be, eligible for the new four-year FIG regime will be taxed on foreign gains in the normal way. Transitionally, individuals who have claimed the remittance basis will, on a disposal of an asset held personally at 5 April 2019, be able to elect for UK CGT purposes to rebase that asset to its value as at that date.

From 6 April 2025, the protection from UK taxation on future income and gains as it arises within trust structures (whenever established) will be removed for all current non-domiciled and deemed domicile individuals who do not qualify for the new four-year FIG regime. 

FIG arising in non-resident trust structures from 6 April 2025 will be taxed on the settlor (if they have been UK resident for more than four years) on an arising basis. FIG which arose in the trust or trust structure before 6 April 2025 will be taxed on settlors or beneficiaries if they are matched to worldwide trust distributions. 

UK Inheritance Tax (UK IHT)

From 6 April 2025 the government intends to move inheritance tax from a domicile-based regime to a residence-based regime. This will be subject to consultation, but initial commentary would suggest that UK IHT on worldwide assets would apply when a person has been resident in the UK for ten years. There may be a “tail” mechanism which could keep a person within the scope of UK IHT for ten years after the cessation of UK residence.

UK situs assets are likely to remain within the charge to UK IHT on the same basis as present, regardless of residence.

The IHT consultation will deal with the design of this new residence-based system for IHT to apply from 6 April 2025. There will be a number of detailed issues and interactions that will need to be consulted on, including transitional provisions, length of residence criteria and “tail” provisions etc.

National Insurance

For the self-employed, the main rate of Class 4 National Insurance contributions will be reduced by 2 percentage points from 8% to 6% from 6 April 2024.

From 6 April 2024, self-employed people will no longer be required to pay Class 2. 

High Income Child Benefit Charge (HICBC)

The HICBC seeks to claw back child benefit received by “higher earners”. From 6 April 2024, the starting threshold for clawback will be increased from £50,000 to £60,000.

The claw back will apply at a rate of one per cent of the full Child Benefit award for each £200 of adjusted net income between £60,000 and £80,000, halving the rate at which HICBC is charged. The charge on taxpayers with income above £80,000 will be equal to the full amount of Child Benefit paid.

UK Individual Savings Account (ISA)

The government will introduce a new UK ISA with its own allowance of £5,000 a year. The government will consult on the details at a later date.

Capital Gains Tax annual exempt amount

As previously announced, the capital gains tax annual exempt amount will be reduced from £6,000 to £3,000 from 6 April 2024. This represents a further significant reduction in the annual exempt amount which formerly stood at £12,300 before 6 April 2023.

Employment taxes

Jeremy Hunt’s confirmation of a widely expected cut of 2 percentage points to National Insurance was one of the key headlines of the Spring Budget. Taken together with changes at Autumn Statement, the Chancellor has billed this measure as the largest ever cut to employee National Insurance as he sought to make the government’s case in a general election year.

A reduction in NIC is obviously a cheaper option than a similar cut to income tax, but as it prioritises earned income over unearned income, it can still be seen as a growth strategy that encourages work. 

National Insurance Contributions

From 6 April 2024, the government will introduce legislation to reduce the main rate of Class 1 Primary National Insurance Contributions (NIC) from 10% to 8%. For workers earning £35,000 per year, this will result in a saving of £450. For someone earning over £50,000 a year, they stand to save around £750 per annum.

This measure is in addition to the previously announced NIC reductions in the 2023 Autumn Statement which took effect from 6 January 2024. 

Highlighting the expected impact of these changes on growth and productivity the Office for Budget Responsibility forecast that total hours worked in the economy should increase by the equivalent of almost 200,000 full-time workers by 2028/29

Whilst these changes will provide a small increase in take home pay for working families in Northern Ireland, the decision to leave the personal allowance and other tax thresholds unchanged will, in effect, represent a significant stealth tax on local employee earnings that increases over time.

Employees, who have also been dealing with the effects of inflationary cost pressures in recent years, may not see a great impact on their personal finances as a result of this cut in NIC rates.

Globally mobile employees

In line with the government's plans to abolish the remittance basis of taxation for non-UK domiciled individuals from 6 April 2025, Overseas Workday Relief (OWR) will also be reformed.

This will be of particular interest to employers of internationally mobile individuals and the intention is for the relief to be retained and simplified, with eligibility based on the new regime. 

OWR will continue to provide Income Tax relief for earnings from duties carried out overseas with restrictions on remitting these overseas earnings removed. In the new regime, there will be no tax on foreign income and gains for the first four years of UK tax residency.

After four years of UK tax residency, non-domiciled individuals will be taxed in the same way as other UK residents. Transitional arrangements will be introduced for those benefiting under the current system.


The government will continue to ‘explore’ reforms which will enable workers to take their pension pots with them when they change jobs.

Business taxes

The Spring Budget 2024 contained limited announcements in respect of UK corporation tax. The Chancellor did however confirm that legislation will be introduced in the Spring Finance Bill 2024 to maintain the main rate of UK corporation tax at 25% and the small profits rate at 19% for the financial year beginning 1 April 2025.

Further matters in relation to corporation tax referenced in the Spring Budget 2024 are summarised below.

Creative industry tax reliefs

The creative industries are emerging as one of the fastest growing and increasingly important sectors of the Northern Ireland economy. Promoting innovation, research and development, and creativity has been recognised by the Northern Ireland Executive as a key priority in rebuilding and rebalancing the Northern Ireland economy. A suite of creative industry tax reliefs currently provides enhanced corporation tax relief on expenditure and repayable tax credits in loss making situations. 

Today, the Chancellor announced the Independent Film Tax Credit (IFTC) which is an additional support for qualifying ‘independent films’. Films which meet the qualifying criteria for an independent film will be eligible for a higher rate of expenditure credit on their qualifying expenditure. The basic rate of credit under AVEC is 34%. Independent films will receive a rate of 53%.

Full expensing to leased assets

As announced at Autumn Statement 2023, full expensing and the 50% first-year allowance for special rate assets were made permanent. However, expenditure on plant or machinery for leasing is currently excluded from these allowances. The government confirmed it will publish draft legislation for technical consultation to help it consider any potential extension to include plant and machinery for leasing.

Energy Profits Levy - Energy Security Investment Mechanism

The Energy Profits Levy is a temporary tax on the exceptional profits of oil and gas companies. As previously announced at the Autumn Statement 2023, the government will introduce legislation in Spring Finance Bill 2024 to provide for the Energy Security Investment Mechanism (ESIM).

The ESIM will end the Energy Profits Levy early if the 6-month average price for both oil and gas is at or below the ESIM threshold prices. These thresholds will be adjusted from 1 April 2024, and annually thereafter, by the preceding December’s Consumer Prices Index figure.

Energy Profits Levy - Decarbonisation investment allowance

The Energy Profits Levy was announced in the Autumn Statement 2022, and introduced a 80% decarbonisation investment allowance, to incentivise oil and gas companies to invest in the decarbonisation of upstream oil and gas production in support of the sector’s ambition to reduce greenhouse gas emissions. The Chancellor announced at Spring Budget 2024 that the government will extend the end date of the Energy Profits Levy to 31 March 2029.

Property taxes

In a bid to ensure the property tax system operates more fairly and more efficiently, the Chancellor announced several changes in relation to UK property taxes. 

Capital Gains Tax

In line with the governments objective of reducing taxes, a key measure for individual taxpayers is the reduction to 24% of the top rate of Capital Gains Tax (previously 28%) payable on the disposal of residential property that is not the taxpayer’s main ‘home’ (private residence relief will continue to apply on disposals of taxpayers main residence).

The lower rate of 18% will remain for any gains arising that fall within an individual’s basic rate band. This measure is to have effect for chargeable gains accruing on or after 6 April 2024 and legislation is expected to be introduced in the Spring Finance Bill 2024.

This reduction in the Capital Gains Tax rate is designed to increase property transactions (raising tax revenue thereon) and boost supply in the housing market at the same time.

Furnished Holiday Lettings

The Chancellor is abolishing the Furnished Holiday Lettings (“FHL”) tax regime from 6 April 2025. This is to level the playing field between short-term and long-term property rentals as the FHL rules apply to short-term property rentals only.

Where property rentals are within the FHL rules, additional tax reliefs are available including for certain categories of capital expenditure (e.g. furniture and fixtures). ‘Short-term’ for these purposes means for a period of 31 days or less (although here are several other conditions that must be met to fall within the FHL rules).

As such, it may be more advantageous to let properties on a short-term basis in comparison to properties let for longer periods due to the additional tax reliefs available.

The Chancellor hopes that by removing the incentive for landlords to offer short-term holiday lets rather than longer leases, this will increase the availability of long-term rental properties to help enable people to live in their local area. 

Stamp Duty Land Tax

The Chancellor has also confirmed that Multiple Dwellings Relief (“MDR”) – a relief from Stamp Duty Land Tax for purchasers acquiring more than one residential property in a single (or a linked) transaction – will be abolished from 1 June 2024.

Following a consultation process and the subsequent commissioning of an external evaluation, the government has determined that the original objectives of MDR (when introduced in 2011) to reduce barriers for investment in residential property and to promote supply in the private rental sector, are not being met and instead the measure has been the subject of incorrect and abusive claims. 

Property transactions with contracts that were exchanged on or before 6 March 2024 should continue to benefit from MDR regardless of when the transaction completes (even if this is after 1 June 2024), as will any other purchases that are completed (substantially performed) before 1 June 2024. 

Indirect taxes

Recent fiscal events have been very quiet from an Indirect Tax perspective. With this backdrop and some high-profile campaigns for change - not least in relation to the Retail Export Scheme (for Great Britain) and increasing the VAT registration threshold - those with an interest in indirect tax had cause to believe this Spring Budget would be different.

However, that wasn’t to be: today’s announcements by the Chancellor were more modest than expected, with speculation regarding changes not materialising and the increase to the VAT registration threshold being lower than the mooted increase to £100,000. 

Considering the position in Northern Ireland, the flexibilities on VAT rates secured under the Windsor Framework could have paved the way for changes to rates or additional reliefs but again this wasn’t to be.

However, if the limited changes suggest a stability in this area of the tax system, the experience of businesses is very different, with an increase in compliance activity undertaken by HMRC in recent months being felt across a wide range of indirect taxes.

The main Indirect Tax and Duties announcements were as follows:

VAT registration threshold

This is increasing for the first time in seven years to £90,000 (previously £85,000) from 1 April 2024. There will also be an increase in the VAT deregistration threshold to £88,000 (from £83,000) from this date. 

Although this may be welcomed by some small businesses, given the modest increase in the thresholds, the overall impact is going to be limited. The VAT registration threshold results in a cliff-edge and impacts the growth of small businesses.

While it has been presented as a boost for SMEs, today’s change doesn’t address that fundamental challenge. Interestingly the announcement states that the thresholds will be frozen at these levels, which appears to rule out a return to annual incremental increases of the past.

VAT Retail Export Scheme

Much of the pre-Budget speculation for VAT was around the Retail Export Scheme for GB (NI operates a Retail Export Scheme under rules specific to NI). However, there was no change in this area. The government has indicated it will consider findings of the OBR in relation to the costing of the removal of ‘tax-free shopping’ and is happy to consider other representations.

Alcohol duty

The freeze on alcohol duty, which was due to end in August 2024, has now been extended to February 2025. This extends the six month freeze which was announced in Autumn Statement 2023.

Fuel duty

This will remain at its current rate and will be frozen for the next 12 months. This extends the 5p cut in Fuel Duty, introduced in Spring Statement 2022 and extended in Spring Budget 2023, until March 2025.

Vape levy

A new duty will be introduced on vaping products from 1 October 2026. There will be a consultation on the detailed design and implementation of this duty, which will close on 29 May 2024. This duty will apply to vaping devices and e-cigarettes and is aimed at deterring non-smokers from taking up vaping. The rates will be £1 per 10ml for nicotine free liquids, £2 per 10ml on liquids that contain 0.1 - 10.9mg nicotine per ml and £3 per 10ml on liquids that contain 11mg nicotine per ml.

Tobacco duty

There is to be a one-off tobacco duty increase of £2 per 100 cigarettes or 50 grams of tobacco from 1 October 2026.

Air Passenger Duty (APD)

APD for economy passengers on domestic and short haul flights will remain frozen in 2024. However, the Chancellor did announce a one-off adjustment to APD rates on non-economy passengers to account for high inflation in recent years. The 2025-26 rates will increase in lines with forecast RPI.

Carbon Border Adjustment Mechanism (CBAM)

As announced in December 2023, a UK CBAM will be introduced from 1 January 2027 and will apply to relevant goods imported in the aluminium, cement, ceramics, fertiliser, glass, hydrogen and iron and steel sectors.

Plastic Packaging Tax (PPT)

As previously announced, there will be an increase in the rate of PPT from 1 April 2024 from £210.82 per tonne to £217.85 per tonne for plastic packaging with less than 30% recycled plastic content.

Landfill tax

Landfill tax rates for the year 2025-26 will be adjusted to better reflect actual RPI and ensure the tax continues to incentivise investment in more sustainable waste management infrastructure. The standard rate of landfill tax will increase to £126.15 per tonne and the lower rate will increase to £4.05 per tonne.

Get in touch

If you have any queries on the UK Spring Statement and its impact for your business, please get in touch with Johnny Hanna or Paddy Doherty.

We’d be delighted to hear from you.