What were the key announcements in the Spring Budget 2024?

Today (6 March 2024), The Chancellor of the Exchequer, Jeremy Hunt, delivered his Spring Budget 2024 to the House of Commons. Our latest article highlights the key announcements made in the Spring Budget 2024.

Spring Budget 2024: Economic Overview

The Spring Budget 2024 is likely to be the last Budget before the general election, which is expected to occur later this year. The Chancellor announced that inflation will finally drop below the 2pc target “in just a few months”, according to the latest forecast by the Office for Budget Responsibility (OBR). The OBR has also announced that debt as a share of GDP – set to exceed 1000pc – is now forecast to fall yearly until reaching 94.3pc in 2028-29. The OBR predicts the UK economy to grow by 0.8% this year and 1.9% next year.

The entire Spring Budget 2024 is available on the government’s website.   

Key Announcements

National Insurance Tax cuts

Jeremy Hunt has confirmed that the National Insurance contribution rate will be cut by 2p in the pound from 6 April 2024. This comes on top of a 2p cut in the Autumn Statement in November, which reduced the rate from 12% to 10%. It is estimated that the 2p cut in April to National Insurance would save around £450 a year for someone on a £35,000 full-time salary. An equivalent cut was also announced for the self-employed, amounting to a saving of roughly £350.

Child Benefits

Tens of thousands of families can claim more child benefits from April. The Chancellor has announced that the income level at which a parent starts to lose child benefit entitlements will rise from £50,000 to £60,000. The top of the taper will also increase to £80,000, slowing the rate at which the benefit recedes and allowing 170,000 more families to benefit.

Non-dom tax

The ‘non-dom’ tax regime for UK residents whose permanent home is overseas will be replaced with new rules from April 2025 to raise £2.7bn a year. Currently, non-domicile status allows foreign nationals who live in the UK but are officially domiciled overseas to avoid paying UK tax on any overseas income or capital gains for their first seven years in the country. From April 2025, new arrivals to the UK will not have to pay tax on foreign income and gains for the first four years of their UK residency. After that, they will pay the same tax as other UK residents.

British ISA

A new “British ISA” will provide individual savers with another £5,000 of annual tax-free allowance to invest in UK-listed companies. Jeremy Hunt said the new British ISA would “ensure that British savers can benefit from the growth of the most promising UK businesses” and support those firms’ expansion.

Business Tax Cuts

As part of the Autumn Budget, Jeremy Hunt unveiled a £10bn tax cut for businesses that make capital investments in the UK, known as “full expensing.” Following calls from business lobbying groups, firms will also be able to claim tax relief for leased assets.

In addition to business rates support, the Chancellor announced a further £200m will be provided to the post-pandemic Recovery Loan Scheme, which lends money to small businesses to boost growth.

A new plan for a tax credit for independent films with budgets of less than £15m has also been announced. The Chancellor has said he will give film studios in England relief on their gross business rates until 2034.

From April, the threshold at which small businesses must register to pay VAT will rise from £85,000 to £90,000.

NHS and Public Spending

As planned, Mr Hunt announced public service spending will rise by 1pc in real terms over the next parliament. However, the Chancellor added the government would “spend it better” as he unveiled plans to boost public sector productivity. The Treasury has agreed to fund a £3.4 billion upgrade of NHS computer systems to unlock £35 billion of potential savings. A further £2.5bn is also being invested to meet “pressures in the coming year”.

Housing and Holiday Lets

The higher rate of tax paid on profits from selling property has been cut from 28% to 24%.

Tax breaks for owners of holiday let properties has been scrapped as too few properties are available for local people.

Fuel, Transport and Energy

The Chancellor has announced that fuel duty will be frozen for the 14^th year running. The 5p cut in fuel duty on petrol and diesel, due to end later this month, will be kept for another year. This is expected to save the average motorist £50 next year.

A “windfall tax” on energy firms’ profits, scheduled to end in March 2028, has been extended until 2029.

Jeremy Hunt also announced that air passenger duty, the tax paid on flights, will increase for business class tickets.

Nuclear and Green Energy

The government has reached a £160m deal with Hitachi to buy the Wylfa nuclear site on Anglesey and the Oldbury site in South Gloucestershire. Both sites have been put forward as potential sites for future large-scale or smaller modular nuclear reactors.

Alcohol, Tobacco and Vape Tax

The freeze on alcohol duty, due to end in August and go up by 3pc, has been extended to February 2025. The freeze extension should benefit around 38,000 pubs across the UK.

Following a consultation, a new tax will be introduced for vaping products in October 2026. An existing tax on tobacco will increase to maintain the “financial incentive to choose vaping over smoking.”

Other announcements

• The government fund for people struggling with the cost of living pressures to continue for another six months.
• £90 fee to obtain a debt relief order is to be scrapped.
• Longer repayment periods for people on benefits taking out emergency budgeting loans from the government are to be introduced.
• Construction of nearly 8,000 homes will be supported by £242m investment in Canary Wharf and Barking Riverside. The money will transform Canary Wharf into a “new hub for life science companies”
• Plans for a “North-East trailblazer devolution deal” worth £100m announced alongside plans to devolve more powers to Warwickshire, Surrey and Buckinghamshire.

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