Spring Budget 2024: How it Affects You

With what could be the final budget before the general election, Chancellor of the Exchequer Jeremy Hunt today delivered his Spring Budget to The House of Commons to announce the Government’s tax and spending plans.

After lots of speculation over the last few days around tax cuts ahead of the forthcoming election, reports suggested that several measures were being considered to raise money to fund this, including raising duty on flying first class.

It was expected that further permanent cuts to National Insurance would be announced and potentially an income tax cut as well with Jeremy Hunt aiming to give “a message of hope in challenging times” and achieve heathy long-term economic growth, good public services as well as reducing taxes.

Another big talking point ahead of the Spring Budget was the possibility of taxing vaping as well as examining scrapping non-domiciled tax status, which the Treasury had declined to comment on.

Read on for the key points from today’s Spring Budget statement.

Further Reductions to National Insurance Contributions

Due to the progress that’s been made reducing inflation and increasing investment in the economy, further measures were announced to cut taxes following the cuts in the previous Autumn Statement.

Effective from the start of the new tax year on April 6th, Class 1 Employee National Insurance Contributions will be cut by a further 2p in the £1 from 10% to 8%.

Class 4 National Insurance Contributions for self-employed people will be cut further from 8% to 6%.

These measures equate to an additional annual £450 saving for the average employee and £350 saved for the average self-employed person.

Mandatory VAT Registration Threshold Increased

The VAT registration threshold will be increased from £85,000 to £90,000 from 1st April 2024. This is the first time this threshold has increased in 7 years which will mean thousands of businesses will no longer be required to register for VAT.

Permanent Expensing for Leased Assets

Draft legislation will soon be produced to help boost business investment so full expensing can be applied to leased business assets with the legislation being introduced as soon as it’s affordable.

Child Benefit Changes

The high-income child benefit charge is one that the government will look to reform in the long term, with the view to change to a household based system as opposed to the current system which sees the charge apply if the highest earner in a household earns over £50,000.

In the interim, and in good news for families, the high income child benefit threshold will now start from £60,000 and will taper to £80,000. Currently the high income child benefit charge begins at £50,000 and is fully repaid at £60,000.

Non-Domicile Tax Reform

A rumoured change prior to the budget, the regime whereby individuals were able to avoid paying tax on their foreign income is to be scrapped and replaced by a new residency based system from April 2025.

Under the proposed new system, there would be no taxation on foreign income for individuals arriving in the UK for the first four years after which regular UK residence taxation would apply. There will be a transition period for those currently utilising the “non-dom” system.

British ISAs Introduced

There was good news for savers with a new British ISA scheme to be introduced to allow people to invest £5,000 annually in UK equity. This is expected to be in addition to the existing £20,000 annual ISA allowance.

Cost of Living Assistance

Measures to help those falling into debt were key amongst the announcements. The repayment period for budgeting advance loans will increase from 12 months to 24 months for those on low incomes. The £90 charge for obtaining a debt relief order will also be abolished helping 40,000 families per year. The Household Support Fund will also be kept at its current level for another 6 months.

Fuel And Alcohol Duty Frozen

In good news for motorists, the Fuel duty freeze previously introduced in 2022 was temporary and fuel duty would have increased by 13% this month, but the Chancellor is maintaining the 5p cut for a third year and keeping it frozen for another 12 months. Alcohol duty was frozen in the Autumn statement and this freeze is now extended until February 2025 which will continue to cut costs for pubs, bars, restaurants, nightclubs and more.

Changes for Landlords and Property Investors

In news that could impact landlords and property investors, the multiple dwellings relief will be abolished for those that purchase multiple properties at once. The higher Capital Gains Tax rate on residential property will be reduced from 28% to 24% with the aim of increasing the number of transactions to ultimately generate more revenue for the Government. The Furnished Holiday Lettings Relief scheme will also be abolished from April 2025.

Other Key Points Include:

  • £100m of levelling up funding to be allocated to support cultural and capital projects and community regeneration across the country
  • NHS productivity plan to be funded in full at a cost of £6bn with a focus on reducing waiting times and improving service
  • £200m will be provided to extend the recovery loan scheme to help small business and SMEs
  • A new tax will be imposed on vapes, tobacco duty will increase and the tax on non-economy flights will increase
  • Planned growth in day-to-day spending will be maintained at 1% in real terms
  • Additional tax credits of 5% and a 40% tax relief for eligible film studios to boost the creative industry in the UK
  • £105m to be invested over the next 4 years to build 50 new special free schools
  • Guaranteed rates to be paid to childcare providers over the next 2 years as part of the Government’s boosted childcare offer to help more people into employment with 30 hours of free childcare being provided for working parents

How Gorilla Accounting Can Help You

As the UK’s most trusted accountants, our experts can help you make sense of the Spring Budget and how it could affect your business. Our accountants are on-hand to answer any queries you have regarding the Budget, your accounting needs, tax-optimisation, and much more.

If you need an accountant that you can trust with your finances, call us today on 0330 024 0406 or request a call back here.