Spring Budget 2024 – How does it impact you?

Chancellor of the Exchequer Jeremy Hunt delivered his Spring Budget to Parliament today in what he called his plan for 'Long-term growth'. In this article, we provide a breakdown of the key announcements from the Spring Budget 2024.

What was announced in the Spring Budget 2024?

Taxation

• National Insurance cut for employees - The main rate of National insurance (charged on earnings between £12,570 and £50,270) is being cut from 10% to 8% from April 6th 2024. It means that an average worker on £35,400 will receive a tax cut of around £450 per year. National Insurance had previously been cut from 12% to 10% in the Autumn statement, coming into place on 6th January 2024. The combined cuts mean that the average worker on £35,400 will be around £900 per year better off. For full details read our article "New National Insurance cuts: How much better off will you be?".
• National insurance cut for self-employed - Payable on profits between £12,570 and £50,270, the rate of class 4 National Insurance will now be cut by 3 percentage points, reducing from 9% to 6%, rather than 1 percentage point as announced in the Autumn statement. Combined with the abolition of the requirement to pay Class 2 National Insurance contributions, it represents a saving of around £650 for the tax year 2024/25, based on an average self-employed salary of £28,000. For full details read our article "New National Insurance cuts: How much better off will you be?".
• New £5k ISA Tax allowance - An additional £5,000 ISA tax allowance will be available for savers investing in 'UK-focused' investments. There was no timeframe given on when this will be implemented, as a period of consultation is to occur first, however you can read more about the announcement in our article "UK ISA announced – How will the new ‘British ISA’ work?"
• Tax changes for non-UK domiciled individuals - Tax for non-UK domiciled individuals will be replaced with a modernised residence-based regime. It means that from 2025/26, anyone who has been a tax resident in the UK for more than four years will pay UK tax on their foreign income and gains, as is the case for other UK residents. This will be introduced in 2025/26. For the first year of the new regime there will be an initial temporary 50% exemption for the taxation of foreign income.

Property

• Capital Gains Tax - The higher rate of Capital Gains Tax (CGT) for residential property disposals will be cut from 28% to 24%. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate income tax band.
• Furnished holiday lettings tax - Abolishment of the current tax regime meaning an end to tax breaks for owners of holiday lets. It is aimed at helping people to continue living in their local area.
• Multiple dwellings relief abolished - The stamp duty relief available to those who purchase more than one dwelling in a single transaction will no longer apply. It was initially intended to support investment in the private rental sector, however, an external evaluation concluded that there was "no strong evidence that the relief was meeting its original objectives".

Duty

• Fuel Duty - Fuel duty has been frozen for 12 months meaning the temporary 5p cut introduced in 2022 remains in place.
• Alcohol Duty - The freeze on alcohol duty has been extended until 1st February 2025.
• Vaping Duty - A new duty on vaping will be introduced from October 2026. It aims to discourage non-smokers from taking up vaping, rather than penalise smokers who are transitioning to a healthier alternative.
• Tobacco Duty - Duty on tobacco will increase from October 2026 in line with the new announcement on Vaping tax.

Benefits

• Child Benefit reform - Full child benefit to be paid to households where the highest-earning parent earns up to £60,000, an increase to the current limit of £50,000. Child benefit will be tapered where the highest earner earns between £60,000 to £80,000. For full details read our article "Income threshold for Child Benefit tax increased to £60,000 – what it means for you".
• Emergency Budgeting Loans - Longer repayment periods will be permitted for people on benefits taking out emergency budgeting loans from the government.

Businesses

• VAT - The VAT registration threshold for small and medium-sized enterprises (SMEs) will be increased from £85,000 to £90,000 for the 2024/25 tax year.
• Tax relief for theatres, orchestras, museums and galleries made permanent - From 1st April 2025 rates will be permanently set at 45%/40% for theatres, museums and galleries’ touring / non-touring productions and at 45% for orchestras.
• Energy Profits Levy (EPL) extended - The 'Windfall' tax on energy firms - expected to finish in March 2028 -  has been extended until 2029

What was not announced in the Spring Budget 2024?

While the Spring Budget 2024 brought some welcome cuts to the rate of National Insurance and an overhaul in how Child Benefit is paid to families, many feel it could have gone even further. We list the notable exclusions from the Spring budget below:

Income Tax

In his speech to parliament, the Chancellor stated that the economy "is now beginning to turn a corner and because the government is sticking to the plan it can now make further tax cuts for working people, boosting growth whilst keeping the public finances on a sustainable path". Many had hoped that we would see a cut to the basic rate of income tax, however, it never materialised.

Lifetime ISA

Many had hoped for a change to the rules that penalise Lifetime ISA savers. The current £450,000 cap means those buying a property worth more have to withdraw their savings and face a hefty penalty, potentially getting back less than they have paid in. It is understood that the change will be put forward as part of a bigger home ownership package later down the line and could include more than simply scrapping the penalty.

Pensions

There were calls for Jeremy Hunt to reform the State Pension system, however, mentions of pensions were few and far between. In a fleeting reference, the Chancellor simply stated that the government is "committed to supporting pensioner incomes by maintaining the triple lock. In 2024-25, the full yearly amount of the basic State Pension will be £3,700 higher, in cash terms, than in 2010". In addition the Chancellor confirmed a commitment to "continue to explore how savers could be allowed to take their pension pots with them when they change job".

Also there were no changes made to tax relief on pension contributions.

Stamp Duty

Rumours were circling that a stamp duty cut was imminent and some even suggested there could be new measures introduced that would see the introduction of 'ultra-low' deposits for first-time buyers to help stimulate the property market. The only mention of Stamp Duty, however, was the abolishment of the multiple dwellings relief, a relief applied to Stamp Duty for those who purchase more than one property in a single transaction.

Resources

The full Spring Budget 2024 can be downloaded and read in full via the official link below.

• Spring Budget 2024