Jeremy Hunt announced pre-election spring budget statement on 6th March 2024 and called it a “budget for long term growth”. He said the UK economy has managed to deal with the financial crisis driven by the pandemic and energy crisis caused by war in Europe. He admitted that rates remain high in a motion to bring down inflation. He said: “We can now help families not just with cost-of-living support but with permanent cuts in taxation.”
Here are key highlights of Spring Budget 2024:
National Insurance (NI)
• Jeremy Hunt confirmed that NI rate will be reduced to 8% from 10% of the pay from April 2024.
• It is projected that the 2% cut to national insurance would be worth about £450 a year on a £35,000 full-time salary.
• The government is also cutting a further 2% from the main rate of self-employed NI contributions from 9% to 6%.
• The tax cut will be paid for through a mix of tax increases elsewhere, on business class airfares, vapes, tobacco, and owners of short-term holiday lets.
• The government will launch a consultation later this year to deliver its commitment to fully abolish Class 2 National Insurance. This follows the announcement at Autumn Statement 2023 that from April 2024 no self-employed person will be required to pay Class 2, whilst those who pay voluntarily will continue to be able to do so to build entitlement to contributory benefits.
Capital Gains Tax
• The government will reduce the higher rate of Capital Gains Tax on residential properties from 28% to 24% from 6 April 2024. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band.
Savings
• The Chancellor announced a new “British Isa”, giving investors £5,000 extra tax-free allowance to “encourage more people to invest in UK assets”.
• Currently, the annual allowance is £20,000. But this will rise to £25,000 for British ISAs.
• A new British Savings Bond will be launched in April 2024, delivered by the state-owned National Savings and Investments. It will offer a guaranteed fixed rate for three years.
• The Chancellor said this will “ensure that British savers can benefit from the growth of the most promising UK businesses” while supporting those firms to grow.
Child benefits
• The government will raise the threshold for the High Income Child Benefit Charge from £50,000 to £60,000 from 6 April 2024, and there will be a tapered charge between £60,000 and £80,000. The government will also consult on moving to a household-based system rather than one based on individual incomes from April 2026.
• The government announced that the hourly rate childcare providers are paid to deliver the “free” hours offered for children aged nine months to four years will increase in line with the metric used at the Spring Budget for the next two years.
Non-domiciled individuals tax status
• Hunt confirmed that non-dom tax status will be “abolished” and substituted by a “modern, simpler and fairer” system from April 2025. The status helped people who live in the UK but who have certain foreign links – through their father born oversees, for example. They were only required to pay taxes on money earned within the UK, not on foreign income. After the changes, those coming to the UK will pay the same tax as other UK residents after four years.
Energy and windfall tax
• The government extends the windfall tax on the profits of North Sea oil and gas companies by a year, raising an expected £1.5bn. It was expected to end in March 2028, but will now conclude in 2029.
• The government will spend £160m on two nuclear sites.
• The Chancellor allocated £120m for offshore windfarms and carbon capture and storage projects.
Public services
• The Chancellor said the government is keeping a 1% increase in day-to-day public spending above inflation, despite rumours it would be cut to just 0.75%.
• Military spending will rise to 2.5% from 2% of GDP “as soon as economic conditions allow”.
• He announced a “landmark public sector productivity plan” will be published, including cutting form filling by doctors using AI, digitising hospital processes, and improving the NHS app.
Growth and inflation
• The Chancellor said the economy is anticipated to grow by 0.8% this year and 1.9% in 2025. That is marginally stronger than the 0.7% and 1.4% growth rate projected by the Office for Budget Responsibility in November, at the time of the autumn statement.
• Economic growth is then estimated to be 2% in 2026 before dipping to 1.8% and 1.7% in 2027 and 2028.
• Hunt said inflation is anticipated to fall below the government’s 2% target in “just a few months’ time”, down from 4% in January.
Others
• The Chancellor confirmed plans to scrap the furnished holiday lets regime, which allowed tax reliefs on holiday renting compared to long-term renting. The change is projected to raise £300m a year for the Treasury.
• The Chancellor confirmed that the widely expected plans for a “vaping products levy”, to be paid on imports by manufacturers, specifically on the liquid in vapes, will be introduced in October 2026.
• A one-off increase in tobacco duty is also announced.
• He said that the VAT registration threshold will be increased from £85,000 to £90,000 from the start of April.
• The government plans to allow full expensing to apply to leased assets.
• The government also plans to sell a chunk of shares in NatWest bank in the summer.
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