Today Chancellor Jeremy Hunt delivered the Spring Budget alongside a fiscal outlook from the Office for Budget Responsibility. The new legislative proposals represent a major shift for the UK economy, poised to touch the lives of all residents and workers across the nation.
The Spring Budget focuses on fortifying the British economy and bolstering support for working households. This follows the Chancellor’s previous statements which enhanced minimum wages, State Pension, and saw a decrease in the National Insurance rate. Staying the course on a low-tax agenda, the government has introduced further cuts to National Insurance, along with broad measures aimed at supporting drivers, families, those managing debt, and key economic demographics.
The budget announcement brought forth significant changes, particularly a continued reduction in National Insurance contributions, presenting a boon for employees. Starting April 6th, the Chancellor has cut employee National Insurance from 10% to 8%, building upon the prior Autumn Statement’s reduction from 12%. While this reduction predominantly benefits employees, some analysts caution against such broad tax cuts without targeted measures. The Institute for Public Policy Research (IPPR) has indicated that while such cuts will distribute money among taxpayers, the wealthiest stand to benefit most, with the top 20% of households receiving almost half of the savings.
In the realm of child benefit, families stand to gain from the elevation of the high-income threshold for child benefit, from £50,000 to £60,000. This interim measure precedes a more systemic change to the child benefit payment system.
The property market and first-time homebuyers also receive attention in the new budget, with plans to increase home construction, adjust property capital gains tax rates, and support young people’s homeownership aspirations. Additionally, a sustained freeze in fuel duty aims to ease financial pressures on drivers, although it carries potential environmental implications.
In the creative sectors, tax reliefs for film, media, and arts have been announced, including increased tax credits for visual effects studios and an enduring tax relief for theatres. Moreover, measures to ease the financial burden for families on universal credit have been outlined, including an extension of repayment periods for advance loans and the removal of the Debt Relief Order charge.
Conversely, the furnished holiday lettings tax regime is on the chopping block, impacting landlords of holiday homes. Vapers and smokers face a new tax on smoke-free products and a hike in tobacco duty. Oil and gas companies will see an extension of the windfall tax, a levy borne from soaring profits amidst the pandemic and geopolitical tensions.
Finally, changes to the taxation of non-domiciled residents signal a move towards a simpler and more equitable tax system. These individuals will be subjected to the same tax rules as UK residents after four years of residence.
In summary, the Spring Budget of 2024 charts a path for economic growth, business support, and industrial advancement across the UK. Given the breadth of these initiatives, it’s crucial to obtain professional financial advice to fully understand the implications of the budget on personal and business finances. Consulting with financial advisors will offer clarity on how these measures will specifically impact individuals and businesses.
If you would like more information on how this could affect your finances, don’t hesitate to get in touch.Â
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