Basics of the budget

The flagship announcement was a further cut in the rate of National Insurance contributions for people in work. They fell from 12% to 10% in January and will fall again in April to 8%. The two cuts will save a worker on average full-time pay – which the Treasury puts at £35,400 a year – about £900. The more you earn, the more the cut will be worth, and the Treasury has admitted in an email to me that the average gain is a rather smaller £682. If you earn £50,270 or more, you’ll save around £1,500. But that tapers down to zero if you earn less than £12,570, which is the earnings threshold where National Insurance contributions begin. The gain is also zero for the 1.5 million people working over the age of 66, because contributions end when you reach that age. (Always check with your employer in your birthday week that the contributions have stopped.)

TWO HOMES

People with more than one home face two changes. If you let it out by the week or month – a so-called furnished holiday let – then the Chancellor is scrapping all the tax advantages from April 2025. You may have to pay council tax on your home rather than business rates and will not qualify for a low rate of Capital Gains Tax if you sell it. The good news is that people who sell a second home that is not used for holiday lets will pay less Capital Gains Tax from April. At the moment most of any gain – the difference between what you sell it for and the price you paid for it – is taxed at 28%. That will fall to 24% from April and reduce the CGT due for most sales. Capital Gains Tax must be paid quickly after a sale and the rules are complicated, so get advice from an accountant about the allowances and expenses you can deduct to reduce the tax due.

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