The 2024 Spring Budget

Key Facts and the Winners & Losers

The 2024 Spring Budget, presented by Chancellor Jeremy Hunt, outlined the government’s plan for the upcoming fiscal year and beyond. Here’s a breakdown of some key announcements and how they might affect individuals and businesses:

Tax Cuts

1. National Insurance (NI) Reduction: The biggest takeaway is a further 2% cut to National Insurance contributions, saving an average earner £450 per year. This, alongside the cut in November 2023, brings significant relief for many individuals.
   

2. High Income Child Benefit Charge Reform: This controversial tax will be reformed, shifting from an individual income threshold to a household income threshold by April 2026. Additionally, the income thresholds are raised, benefiting families immediately.
   

3. Lower Capital Gains Tax (CGT) for Residential Property: To boost the housing market, the higher rate of CGT on non-primary residences will be reduced, encouraging property sales and potentially increasing options for first-time buyers.

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Tax Increases

1. Frozen Income Tax Allowances: While the budget offers some tax breaks, it’s important to note that income tax allowances and bands will remain frozen until 2028. This could lead to “fiscal drag,” pushing individuals into higher tax brackets due to wage inflation.
   

2. Changes for Non-domiciled Individuals: A new residence-based system will tax non-domiciled individuals with significant UK residency on global income and gains. This is expected to raise revenue significantly in the coming years.
   

3. New Vaping Levy and Tobacco Duty Increase: Both vaping products and tobacco will face tax increases starting in October 2026, aiming to discourage vaping while still generating revenue.

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Other Key Points

1. Fuel Duty Freeze Extended: To ease cost-of-living pressures, fuel duty remains frozen for another year, alongside the existing 5p cut, saving drivers an estimated £50.
   

2. Alcohol Duty Freeze Extended: Relief for pubs and consumers continues with the extension of the alcohol duty freeze until February 2025.
   

3. Household Support Fund Extension: Vulnerable households will receive additional support with essentials like food and utilities through a £500 million extension of the Household Support Fund.
   

4. Business Support Measures: The government announced plans to extend full expensing to leased assets for businesses, benefiting them in the long term. Additionally, VAT registration and deregistration thresholds have been increased, offering relief for smaller businesses.
   

5. UK ISA: A new tax-efficient investment allowance of £5,000 will be available for individuals investing in UK-focused assets, encouraging more investment within the UK.
   

6. Pensions: The government aims to improve value for money in defined contribution (DC) pensions and explore a “pot for life” model, giving individuals more control over their pension choices.

Winners

1. Workers: Cuts to National Insurance contributions (NICs) mean more money in your pocket
   

2. Parents: Increased thresholds for the High-Income Child Benefit Charge mean you might keep more of the benefit
   

3. Hospitality industry and motorists: The freeze on alcohol duty and fuel duty cuts save businesses money and benefits consumers
   

4. Small businesses: Increased VAT threshold and a new UK ISA offer tax breaks and investment opportunities
   

5. Savers: New NS&I product with a guaranteed interest rate and the option to invest more in tax-efficient ISAs
   

6. Creative industries: Additional tax relief boosts the sector and attracts investment
   

7. Pensioners: The State Pension “triple lock” is maintained, ensuring rising pension incomes
   

Losers

1. Vapers and smokers: New taxes on vaping and cigarettes aim to discourage use and raise revenue
   

2. Non-economy airline passengers: Higher air passenger duty means pricier premium and business class tickets
   

3. Some “non-doms”: A new residence-based tax regime means more tax on foreign income for some non-domiciled individuals
   

4. Owners of holiday lets: Abolition of the Furnished Holiday Lettings tax regime means the same tax treatment for short-term and long-term rentals
   

5. Anyone affected by fiscal drag: Freezing tax thresholds means some individuals and businesses will pay more tax due to inflation
   

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Overall, the 2024 Spring Budget offers a mixed bag of tax cuts, increases, and freezes. While some individuals and businesses will see immediate benefits, it’s crucial to consider the potential long-term impact of frozen income tax allowances and the introduction of new taxes. These changes will affect everyone in different ways so if you have any questions about how the Spring Budget will impact your finances, please get in touch with us at Bullough Financial Planning.