Spring Budget Summary – 06 March 2024
On Wednesday 06th March, Chancellor Jeremey Hunt delivered his last Budget speech before the hotly anticipated 2024 Parliamentary election.
While the Budget contained many investment announcements, forward planning, and promises of reforms, consultations and simplifications, it was arguably a political Budget among which these headlines were noted:
- A reduction of the 11% inflation rate in October 2022 to the current rate of 4%, with the OBR predicting inflation will sit at 2% in “just a few months’ time”.
- The OBR expects the UK economy to grow by 0.8% this year and 1.9% next year.
- The 2019 Levelling Up Fund saw:
- £100m funding to areas including High Peak, Dundee, Conwy, Erewash, Redditch, Coventry and Bingley
- Over the next decade, £20m to 20 new places, including Darlington, Peterhead, Runcorn, Harlow, Eastbourne, Arbroath and Rhyl, for community regeneration
- £188m to support projects in Sheffield, Blackpool and Liverpool
- £242m of investments in Barking Riverside and Canary Wharf to create some 8,000 houses and transform Canary Wharf into a new hub for life science companies
- A landmark Public Sector Productivity Plan that restarts public service reform and will change the traditional approach to public spending, kicking off with an investment to modernise NHS IT systems at the cost of £3.4bn to unlock £35bn of savings.
Moving on to those matters most likely to affect and be of interest to Champion clients…
National Insurance Contributions (NICs)
- The government will cut the main rate of Class 1 employee NICs from 10% to 8%. This will take effect from 06th April 2024.
- The government will also make a further 2p cut to the main rate of self-employed National Insurance on top of the 1p cut announced at Autumn Statement. This means that from 6 April 2024 the main rate of Class 4 self-employed NICs will now be reduced from 9% to 6%.
Personal & Business Taxation
- Replacement of the non-dom tax regime for UK residents with permanent homes overseas, with new rules starting from April 2025.
- Introduction of a £5,000 UK ISA tax allowance for savers investing in “UK-focused” shares, to be established after a consultation.
- Capital Gains Tax (CGT) payable for higher rate taxpayers on the disposal of residential property will decrease from 28% to 24% from 06th April 2024, but the planned reduction in CGT annual exemption from £6,000 to £3,000 will go ahead.
- VAT Registration changes mean that the turnover threshold where businesses must register for VAT will increase by £5,000 from £85,000 to £90,000 from April 2024.
- Late submission and late payment penalties for VAT and Self-Assessment Income Tax returns will be simplified and now operate under the same regime. Introduced for VAT from January 2023, this will roll out for Self-Assessment income taxpayers on a phased basis from April 2026.
- Interest charged for VAT and Self-Assessment Income Tax will also be simplified and will be charged from the date a payment was due to the date the payment is received.
Child Benefit
- Full child benefits extended to households where the highest-earning parent earns up to £60,000, compared to the current limit of £50,000.
- Partial child benefit to be paid to households where the highest earner earns up to £80,000.
Alcohol, Cigarettes & Vapes
- The current freeze on alcohol duty will be extended until February 2025.
- Vaping products will be subject to a duty to be introduced in October 2026, with a similar increase in Tobacco Duty at the same time.
Transport & Energy
- A 5p cut to fuel duty, which was introduced in 2022 and is due to run out this month, has been extended.
- There will be an increase in air passenger duty for business class tickets.
- The “windfall” tax on energy firms’ profits will be extended until 2029.
- An additional £120 million will be allocated to a government fund investing in green energy projects.
Despite outlining the above, no changes were announced to Income Tax, savings or Dividend rates for 2024 - 2025, nor the Personal Allowance. Similarly, Corporation Tax rates, allowances and reliefs have not been affected by the Budget.
Overall, the announcements didn’t herald too many mainstream changes. As always, the devil is in the detail, and as is so often the case on Budget Day, the details aren’t yet present.
Notwithstanding the Budget statement, it remains to be seen if any of the changes and proposals will stand the course of time if we see a change of government later this year.
For more details on the Chancellor’s Budget announcements please download our summary.
Should you have any questions concerning the Budget, please do not hesitate to a Champion advisor on 0161 703 2549.