Budget comment by Ross Leckridge, Chartered Financial Planner, Aberdein Considine Wealth

There was no rabbit in the hat from today’s Budget, with many announcements requiring further consultation before final plans are put in place. So let’s start by looking at the changes that we know are definitely happening says Ross Leckridge, Chartered Financial Planner, Aberdein Considine Wealth

Ross Leckridge, Chartered Financial Planner, Aberdein Considine Wealth

The biggest announcement, and one which had been heavily trailed ahead of the Budget, was to cut national insurance by a further 2% as of this April. For people in Scotland, the NI cut is better news than the alternative option of cutting income tax which wouldn’t necessarily apply here, unless the Scottish Government chooses to pass it on, because income tax rates are devolved.

Another immediate change which will have a positive impact on many families is the threshold for the high-income child benefit charge, which has been lifted from £50,000 to £60,000 beginning April 2024. This will be welcome news for many families who have felt the effects of soaring childcare costs in recent years alongside the cost-of-living crisis.

Moving to the housing sector, there were a couple of key announcements. The higher rate of tax (Capital Gains Tax) paid on the profits from selling a non-permanent residence such as a holiday let or a second home has been cut from 28% to 24% from April. This will impact a relatively small number of people but the Government hopes it will push landlords to sell and allow others to get on the property ladder, something which may also be encouraged by the additional announcement to scrap tax breaks for owners of holiday let properties.

A Budget of consultations

Although it is still in the consultation phase, one of the bigger headline grabbers is the introduction of a new UK ISA, which will give people the opportunity to maximise their ISA allowance from the existing £20k limit up to £25k. However, there is a catch - this extra £5k allowance will have to be invested in UK equities. It’s not clear exactly how this will work in practice yet but the prospect of an increased tax-free allowance is certainly good news. The Chancellor also announced a new British Savings Bond to be launched next month, which will offer a guaranteed interest rate, fixed for three years.

‘Non-domiciled’ status for people living in the UK but registered as living overseas for tax reasons is also being abolished from April 2025. However, there is a notable grace period as new arrivals won’t have to pay UK tax on foreign income for four years, after which time they will pay the same tax as all other UK residents.

The government is often accused of ‘tinkering’ with peoples’ pensions, but they were given very little attention this time around other than a nod to the ongoing discussion around the Lifetime Provider reform. This is based on the ‘pot for life’ concept, where your pension moves with you if you change jobs, therefore avoiding the potential complexity of accumulating lots of small pension pots with different providers over the course of your career.