On 6th March 2024, Chancellor Jeremy Hunt delivered the Spring Budget statement, outlining the government's economic plans for the coming year.
What is the economic backdrop to the statement?
The Chancellor pointed out that despite the ongoing battle in Europe, the UK economy had persevered through the financial crisis, the pandemic and skyrocketing energy prices. He gave the nation assurances that inflation would drop from 4.0 per cent in January to below the government's 2.0 per cent target in a matter of months, or "nearly a whole year earlier than forecast in the Autumn Statement."
What did the Chancellor say about economic growth?
The Chancellor said that the national economy is projected to grow 0.8% in 2024, 1.9% the following year, and 2.0% in 2026. After that, growth is predicted to drop to 1.8% in 2027 and 1.7% in 2028.
What are the changes in taxation?
Tax Cuts:
- National Insurance cut by 2p
From April 6, the Chancellor declared that National Insurance on employee pay would be reduced by two pence in the pound. For self-employed, a similar reduction was also declared. According to Mr Hunt, this will give the typical employee an extra £450 annually or £350 for self-employed individuals. When combined with an NI reduction from last autumn, that equals a £900 annual tax decrease.
- Child benefit threshold raised from £50,000 to £60,000
As of April, the level of income at which a parent starts to lose Child Benefit will increase from £50,000 to £60,000. All child benefit will be clawed back when income reaches £80,000, up from £60,000.
- Capital gains tax on property cut
The higher rate of capital gains tax on residential property is to be cut from 28pc to 24pc.
- Fuel duty frozen
A 5p cut to fuel duty, which was introduced in 2022 and which was due to run out this month, has been extended.
- Alcohol duty frozen
Alcohol duty was due to rise by 3% from August but Mr Hunt said it will be frozen until February 2025.
- ‘Expensing’ relief for businesses
In his Autumn Statement, Mr Hunt unveiled a £10bn tax cut for businesses that make capital investments in the UK, known as “full expensing”. Now firms will be able to claim tax relief for leased assets as well.
Tax Increases:
- Tax perks for holiday lets scrapped
From April 2025, tax relief for furnished holiday lets will end.
- Stamp duty relief cut on multiple purchases
Stamp duty relief for people who purchase more than one dwelling in a single transaction, known as Multiple Dwellings Relief, has been abolished.
- Non-domicile tax regime to be scrapped
The Chancellor confirmed ‘non-dom’ tax status will be “abolished” and replaced by a “modern, simpler and fairer” system from April 2025.
- Vapes and tobacco duties from October 2026
A new excise duty on vaping products will come into force from October 2026. At the same time, there will also be a one-off increase in tobacco duty.
- Business class airfares to attract higher-duty
Air passenger duty charged on non-economy airfares - or business class tickets - will be increased to account for inflation.
- Oil and gas windfall tax extended
The end of the windfall tax on North Sea oil and gas firms - known officially as the “Energy Profits Levy” - has been extended by one year, to 2029.
Is there further investment in nuclear and green energy?
The Chancellor also confirmed 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 owned by Hitachi. The government hopes to find a partner to develop a nuclear power station there. A second site in Oldbury South Gloucestershire is also part of the agreement.
Mr Hunt has allocated £120m for green industries to develop technologies including offshore windfarms and carbon capture and storage projects.
Is there further help for businesses?
- VAT registration threshold increase
From April, the VAT business threshold increases from £85,000 to £90,000. The Chancellor also announced an extension for the Covid-era government loan scheme (Growth Guarantee Scheme) for small businesses until March 2026.
- Eligible film studios in England will secure 40% relief on their gross business rates until 2034.
In addition, tax relief is made permanent at 45% for touring and orchestral productions and 40% for non-touring productions.
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