Spring Budget 2024 – Key Points

Likely to be his last Budget as Chancellor before a General Election, Jeremy Hunt delivered his Spring Budget 2024 speech at 12.30pm today.

In his speech, he claimed this was a Budget for long term growth.

Download our detailed analysis of the Spring Budget 2024 here:

Spring Budget 2024

A summary of the key measures announced are as set out below:

National Insurance

  • From 6 April 2024, the Employee National Insurance contribution rate will be cut from 10% to 8%.
  • It is estimated that the cut to National insurance will save an employee earning £35,000 approximately £450 per year.

Non-Domicile Tax Status (Non-Dom)

  • The existing ‘Non-Dom’ tax system is to be abolished and replaced with a modern residency based system from April 2025.  The existing system is enjoyed by people who live in the UK but who have certain overseas links – often determined by whether their father was born abroad. The status means Non-Dom’s pay UK tax on money earned here, but not on their worldwide income. After four years, those coming to the UK will pay the same tax as other UK residents.

Wages and Benefits

  • Universal Credit and other benefits to increase by 6.7% from April 2024.
  • The Local Housing Allowance which supports low income families with their housing costs is to increase.
  • People claiming benefits will face mandatory work experience if they do not find a job within 18 months.
  • As pre-announced, the “national living wage” will increase by more than a pound an hour from April to £11.44. It will also be extended to 21-year-olds.
  • There will be tougher requirements for those who claim benefits to look for work.
  • From April 2024, the state pension will be increased by 8.5%.  Basic full State Pension will be £221.20 per week.

Property Taxes

  • The higher rate of Capital Gains Tax payable on gains arising from property will reduce from 28% to 24%.
  • Abolished Stamp Duty Land Tax ‘Multiple Dwellings Relief’.
  • Abolished Furnished Holiday Letting Relief.

Business and Economy

  • £200m fund to provide to Recovery Loan Scheme as it transitions to a Growth Loan Scheme.
  • Plan to allow full expensing to apply to leased assets. Full expensing allows businesses to offset investment in items such as new factory machinery and IT equipment against tax.
  • VAT registration threshold will be increased from £85,000 to £90,000 from the 1 April 2024.
  • ​​The Government will spend £160m on two nuclear sites. The first, on the island of Anglesey or Ynys Môn, is the Wylfa facility in North Wales. It is owned by Japan’s Hitachi. The Government hopes to find a partner to develop a nuclear power station there. The Oldbury site in South Gloucestershire is also part of the agreement.
  • £120m allocated for green industries to develop technologies including offshore windfarms and carbon capture and storage projects.
  • Government to sell some shares in NatWest Bank in the summer 2024, in a move expected to raise £3bn to £4bn. The state’s remaining one-third share in the bank is now worth about £6.9bn.
  • AstraZeneca – the pharmaceutical company behind the Covid vaccine developed by Oxford University – plans to invest £650m in the UK to expand its footprint on the Cambridge Biomedical Campus and fund the building of a vaccine manufacturing hub in Speke in Liverpool.
  • One-off adjustment to air passenger duty on non-economy flights.
  • Windfall tax extended on the profits of North Sea oil and gas companies by a year, raising an expected £1.5bn. It was introduced in May 2022 after Russia’s full-scale invasion of Ukraine sent gas prices soaring, feeding through to producers’ profits. It was due to end in March 2028, but will now conclude in 2029.

Vaping Tax and Tobacco Duty

  • Plans for a “vaping products levy” to be paid on imports by manufacturers, specifically on the liquid in vapes. It will be introduced in October 2026.
  • A one-off increase in tobacco duty is also announced.

Alcohol and Fuel Duty

  • Alcohol duty was due to rise by 3% from August 2024 but it was confirm that it will be frozen until February 2025, benefiting 38,000 pubs across the UK.
  • Fuel Duty frozen at its current level for another year.
  • A 5p cut to fuel duty, which was introduced in 2022 and is due to run out this month, has been extended.

Savings

  • A new “British ISA”, giving investors a £5,000 extra tax-free allowance to “encourage more people to invest in UK assets”.

Childcare and Child Benefit

  • Currently Child Benefit payments to families are progressively withdrawn where one parent earns £50,000 or more per year and Child Benefit payments are withdrawn completely where one parent earns £60,000 or more. From April 2024 these thresholds will increase to £60,000 and £80,000 respectively.
  • A consultation will take place to replace the current ‘unfair’ system to a ‘household system’ from April 2026.
  • Rates paid to nurseries to fund free childcare hours for parents of children aged more than nine months will continue for the next two years. The payments have become worth less to nurseries in recent years as inflation has risen sharply, cutting into childcare providers’ budgets.

Public Services

  • The chancellor has kept a 1% increase in day-to-day public spending above inflation, despite speculation it would be cut to just 0.75%.
  • A “landmark public sector productivity plan” will be published today, including cutting form filling by doctors using AI, digitising hospital processes and improving the NHS app.
  • Military spending will rise to 2.5% of GDP “as soon as economic conditions allow.”  It is now at 2% of GDP.

Inflation

  • Inflation is expected to fall below the government’s 2% target in “just a few months’ time”,
  • The Bank of England’s long-term target is to keep inflation at a “low and stable” 2%.
  • The figure is down from the 11.1% when Jeremy Hunt and Rishi Sunak took office in 2022, as inflation in food and energy prices have eased.

Growth

  • Predictions are that the economy is expected to grow 0.8% this year and 1.9% next year, 0.5% higher than the OBR’s autumn forecast.
  • In November 2023, the OBR had forecast the economy would grow by 0.7% in 2024, before growing by 1.4% in 2025, 2% in 2026, 2% in 2027 and 1.7% in 2028.

Detailed Spring Budget 2024 analysis to follow

We will continue to review the Government’s budget documentation in detail to determine the potential impacts for our clients. When prepared we will provide a more detailed budget analysis available for download to accompany this summary.

If you have any questions on how the announcements impact you or your business, please get in touch on 01228 904904.

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