The Chancellor of the Exchequer, Jeremy Hunt, delivered this year’s Spring Budget 2024 to the House of Commons on March 6, 2024. Our latest article highlights the Chancellor’s key announcements.
Overview of the Spring Budget 2024
The Chancellor’s Spring Budget 2024 focused on tax cuts for parents and workers and included a mix of tax increases elsewhere, focusing on tobacco and vapes, business class airfare and owners of short-term holiday lets. Jeremy Hunt announced that inflation will finally drop below the 2pc target “in just a few months”, according to the latest forecast by the Office for Budget Responsibility (OBR). The Chancellor added, “We can now help families not just with the cost of living support but with permanent cuts in taxation.” He described this year’s Spring Budget as a “budget for long-term growth” amid pressure to ease the record tax burden and boost economic growth.
You can read the Spring Budget 2024 on the government’s website.
What were the Chancellors’ key announcements in the Spring Budget 2024?
Tax and Income Support
National Insurance
The National Insurance Contribution rate will be cut by 2p in the pound for employees from the 6th April 2024. This is on top of the 2p cut announced in the Autumn Statement in November – which reduced the rate from 12% to 10%. It is estimated that the National Insurance cut will save the average full-time employee around £450 per year. An equivalent National Insurance cut was also announced for the self-employed, which would save roughly £350.
Childcare and Child Benefits
Jeremy Hunt announced that a consultation will be held on child benefit rules to apply to collective household incomes instead of individuals, which it currently focuses on. The new rules will apply from April 2026, following the conclusion of the consultation. However, in the meantime, the income level at which a parent will begin to lose child benefit entitlements will increase to £60,000, and the top of the taper will increase to £80,000.
An extra 60,000 parents are predicted to be able to enter the workforce in the next four years as the rates paid to nurseries to fund free childcare hours will continue for the next two years. This applies to parents of children over nine months of age.
Non-domicile Tax Regime
The ‘non-dom’ tax regime for UK residents whose permanent home is overseas will be replaced with a more straightforward, residency-based system from April 2025. The changes are predicted to raise £2.7bn a year. From April 2025, new arrivals to the UK do not have to pay tax on foreign income or gains in the first four years after becoming a UK tax resident and will also be able to bring these funds to the UK free from any additional charges. Tax is not due on non-resident trust distributions either. Tax is due on UK income and gains, as is the case for non-domiciled individuals.
British ISA and a British Savings Bond
The Chancellor announced plans for a new “British ISA” to provide individual savers with £5,000 of annual tax-free allowance to invest in UK-listed companies. Regarding the new ISA, Jeremy Hunt said it “would ensure that British savers can benefit from the growth of the most promising UK businesses” and support those firms’ expansion.
A new British Savings Bond, delivered through NSNI, will offer a guaranteed fixed rate for three years to help people save.
Housing
Property Capital Gains Tax
The higher rate of capital gains tax on profits from selling property has been cut to 24%. Previously, it was 28%.
Stamp Duty
The stamp duty relief has been abolished for people who purchase more than one dwelling in a single transaction (Multiple Dwellings relief).
Furnished Holiday Lettings
The furnished holiday lettings regime has been abolished as there were not enough long-term rental properties available for local people.
Business and Investment
VAT registration threshold
The VAT registration threshold will be increased to £ 90,000 from April 2024. Currently, it is £85,000, but to help businesses, it will increase to £90,000.
Theatre and production
Eligible film studios in England will receive 40% relief on their gross business rates until 2034. A new tax credit will also be available for independent films with a budget of less than £15m.
Tax relief for touring and orchestral productions, due to end in March 2025, has been made permanent. The tax relief will be 40% for non-touring productions and 45% for touring and orchestral productions.
The Chancellor also announced plans to spend £26.4m to upgrade the National Theatres stages.
Full expensing to leased assets
Jeremy Hunt announced plans to expand full expensing to leased assets to allow businesses to offset investment on items such as IT equipment and new factory machinery against tax. The draft bill allowing full expensing for lased assets is expected to be published imminently.
Nuclear sites
The government has negotiated with Hitachi to buy two nuclear sites for £160m. Both sites—the Wylfa facility in Anglesey and the Oldbury site in South Gloucestershire—have been proposed as potential sites for nuclear power stations.
Fuel, transport and green energy
The Chancellor has allocated £120m for green industries to develop technologies, including offshore wind farms, carbon capture and storage projects.
The windfall tax on the profits of North Sea oil and gas companies, which was due to end in March 2028, has now been extended until 2029.
The 5p fuel duty on diesel and petrol, due to end later this month, will be frozen for another year – the 14th year running. It is expected to save motorists on average £50 next year.
The Chancellor has also announced that air passenger duty (the tax paid on flights) will increase for business class tickets.
NHS
As planned, public spending will rise by 1pc in real terms over the next parliament. However, the Chancellor added the government plans to “spend it better” and boost public sector productivity. Jeremy Hunt announced a “landmark public sector productivity plan” to fund a £3.4 bn upgrade of NHS computer systems and unlock a potential saving of £35bn. The public sector productivity plan includes improving the NHS app, digitizing hospital processes, and using NI to reduce doctor form filling. A further £2.5bn is also being invested to meet “pressures in the coming year”.
Tobacco, alcohol and vapes
Due to end in August, the freeze on alcohol duty will continue until February 2025. Set to go up by 2pc, the plans to extend the freeze on alcohol duty should benefit around 38,000 pubs across the UK.
Following a consultation, a new tax on vaping products will be introduced in October 2026. An existing tax on tobacco will also increase to maintain the “financial incentive to choose vaping over smoking.”
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