Spring Budget 2024

by | Mar 7, 2024 | 0 comments

Spring Budget News: 06/03/24

The Chancellor made his Spring Budget Statement yesterday, and it has to be said that writing this update feels very similar to the one we wrote in November. The smoke and mirrors act continued from Jeremy Hunt, trying to create a positive attitude amongst Conservative voters come the next election (which must be held by no later than 28 January 2025). The cynical amongst us may even wonder if he has another budget/autumn statement in him before the general election!

The headline announcements are:

  • Taxation and Wages
    • National Insurance – Following on from the savings and cuts announced in November that took effect from 6 January, the Chancellor announced another 2% cut
      • Employees – From 6 April Employees National Insurance will drop from 10% to 8%. Earnings between £12,570 and £50,270 per year will benefit from this 2% saving
      • Self Employed – Class 4 National Insurance is currently 9% for self employed earnings between £12,570 and 50,270. From April 2024, this will be reduced to 6%, not the 8% the Chancellor announced in November
    • High Income Child Benefit Charge – This is a tax that has been calculated unfairly to date on those receiving Child Benefit. Currently it is applied based on the earnings of the highest earning individual in a household only. Yesterday the Chancellor announced the following changes
      • It was agreed that measuring the charge based on an individual is unfair. He committed to, by April 2026, creating a system where the tax charge will be based on total household income. A welcome measure to make the system fairer, but implementing this may be a challenge!
      • From April 2024 the point at which the charge kicks in (based on the earnings of the highest income earner in the household) will be increased from £50,000 to £60,000. Additionally, Child Benefit is currently clawed back between income levels of £50,00 and £60,000 (i.e. fully repayable at £60,000), but from April 2024 this range will increase and be applied to earnings between £60,000 and £80,000 meaning the rate of clawback will halve.
    • Non-Dom tax regime – These are generous tax rules for those whose permanent home is overseas, this will be replaced from April 2025
    • £5,000 British ISA Allowance – Currently individuals are allowed to invest £20,000 into an ISA (Tax free wrapper) per tax year. From April 2024 this will increase to £25,000 with the additional £5,000 allowance for investment in UK Listed companies
    • Capital Gains Tax on Properties – Currently the higher rate on selling properties, not used as private residence, is 28%. From April this will be reduced to 24%
    • Furnished Holiday Lets Tax Regime – Currently when letting property as a furnished holiday let there are certain tax advantages (interest costs can be deducted at full tax rate, capital allowances can be claimed on certain capital purchase). The Chancellor announced that these tax breaks will end from April 2025
    • Business
      • ‘Full Expensing’ tax break – This will be extended to leased assets when finances allow
      • VAT Threshold Increase – This threshold has been frozen at £85,000 for a number of years. The Chancellor has increased this to £90,000 from April 2024
    • Other measures
      • Alcohol duty freeze extended until February 2025
      • Fuel duty and 5p cut maintained for another year to March 2025
      • Vaping Products will be taxed from October 2026. Consultation will take place in advance of the introduction. The Chancellor also announced that normal Tobacco products will see an increase in duty at this time to ensure that it is still financially beneficial.

      Smarter Opinion

      This was another budget that shows all the signs of a party knowing that it has an election coming up in less than 12 months. The actual financial performance of the Government coffers has shown an upside and inflation has continued to reduce. In this announcement the Chancellor chucked his money around to create the big headlines. We suspect that the financial forecasts weren’t as good as the Chancellor had hoped and therefore some tax giveaways were held back. Rumours had suggested a cut in income tax but the money available didn’t allow such an option. We may anticipate another budget in November for that one?

      The Chancellor defended the Governments record on public spending, tax levels and all things to do with the economy. The simple fact is that the tax take in the UK is the highest it has been since the 1950’s. Yesterday he announced some cuts, but the spending forecast leaves room for concern. We know that Education and Health will be protected and therefore any reductions in public spending will fall on the other services. We can all expect Council Tax bills to drop on our doormat any time soon, expect 5% rises but Local Authorities will still be cutting services to meet their budgets.

      As per our commentary on the November statement this feels very similar. There is some welcome news on changes to the High Income Child Benefit Charge but there are still an awful lot of things that have simply been side-lined, leaving sections of the UK electorate essentially “left out in the cold”.  The things that we think he has conveniently parked are:

      • Tax Free Allowances – These have not changed since April 2019 and are still frozen, per previous announcements, until April 2028. This is a massive hidden tax and with rising wages and inflation will be costing many of you more in tax per year than any savings from the cuts in National Insurance. Allowances should be linked to inflation and current policy is just hiding these tax increases
        • Items like the High-Income Child Benefit Charge and the reductions in personal allowance for incomes higher than £100k were brought in back in 2013. Those allowances had not moved until the Chancellor announced the change to the High-Income Child Benefit Charge yesterday. Inflation in the same period is over 33%. The system is just masking tax increases.
      • VAT threshold – Finally he has increased it, but we have long argued that the VAT system needs a fuller review. The increase in the threshold still creates a false ceiling, just at £90,000 now, and causes real issues to those who marginally exceed the limit. We have long argued that either it should be increased massively or reduced dramatically to produce a level playing field.
      • Limited Companies – These are still being left out, perhaps because of a pending election. Corporation Tax rates have increased massively in the last 12 months and dividend tax (effectively a “national insurance” on dividends) still includes the 1.25% increase that was brought in as part of the “Health and Social Care Levy” (remember that?). You may recall the levy was swiftly axed for National Insurance contributions, but it wasn’t the same for dividend taxes, and neither of the last 2 National Insurance reductions.
      • Business Rates – The current system is outdated and in need of urgent review. Those selling via the web pay little or no business rates and yet those on the High Street pay massive rates. It is part of the reason for the High Street being unable to compete and many household shop names struggling or disappearing from our High Street altogether.

      These are just a few instances where there is a need for a fairer tax system that treats all individuals and businesses equally. In addition, we all want decent public services and I am sure many of you, like us, have been horrified by what has gone on with public services over the last few years.

      Without getting party political it does feel like this Government has run out of ideas. We are not convinced that the alternative is any better though! The reforms needed are large and difficult and the political will and drive to sort such issues seems very limited on all sides.

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      Best wishes, take care,


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