The Chancellor of the Exchequer, Jeremy Hunt, unveiled his 2024 Spring Budget on Wednesday 6 March, alongside an updated economic forecast from the Office for Budget Responsibility.
In this resource, we unveil our comprehensive guide to the Budget, plus an overview from CEO Mike Marigold, and our key headlines from the report.
Spring Budget 2024: Full Guide
Download the full guide here (pdf) >
Spring Budget 2024: Overview from CEO Mike Marigold
Spring Budget 2024: Our key headlines
Too Long: Didn’t Read (TL:DR) Summary!
- Cutting through the noise, we are in a holding pattern until the next General Election. Overall, taxes are still increasing in real terms and we are still in recession. But there are green shoots on the horizon
- The Chancellor mostly focused on confirming policies previously announced in the Autumn and last Spring, but there were a couple of ‘giveaways’
The Detail
Income & Tax
- National Insurance for employed people is being cut from 10% to 8% for earnings between £12,570 and £50,270 from 6th April
- This will save you up to £754 pa
- When combined with the 2% cut in January, this could amount to a total saving of up to £1,508 pa
- Self-employed people earning between £12,570 and £50,270 will pay 6% NICs instead of 8%
- This will save you up to £754 pa
- When combined with the 1% cut in January, this could amount to a total saving of up to £1,131 pa
- The Chancellor confirmed the Autumn Statement policy that self-employed people earning over £12,570 will no longer have to pay Class 2 NICs from April 2024
- Changes to Class 2 NICs will save you up to £192 pa
- Class 3 National Insurance Contributions will stay fixed at £17.45 per week
- This means it will cost you less in real terms, and fill any State Pension gaps you may have
- From 6th April, the highest earner in the household will now be able to earn up to £60,000 before Child Benefits are repaid under the High Income Child Benefit Charge regime (an increase from £50,000)
- 1% of Child Benefits will be repaid for every £200 over £60,000 the highest earner brings in
- This means people will be able to get some Child Benefits right up until the highest earner earns more than £80,000 (an increase from £60,000)
- From 2026, the charge will be based on combined household income, to make it fairer on families where one person is a very high earner and the other earns very little
- Child Benefits are also going up from £24 pw for the first child and £15.90 for other children to £25.60 & £16.95 pw respectively
- The Guardian’s Allowance is following suit, rising from £20.40 pw to £21.75 pw
- As expected, tax brackets are not increasing in line with inflation. This is called “Fiscal Drag”
- In plain English, your income rises with inflation, more of it will fall into higher tax brackets and you will pay more in tax
- There are ways to reduce the amount you pay in tax, whilst also investing in your future. Speaking to a professional will help you unlock those opportunities
- The infamous ‘non-domiciled’ regime will be abolished from April 2025. People will instead pay tax based on being UK resident. There will be a 4-year grace period when people first move to the UK to encourage them to bring over their wealth and invest it in the UK.
Businesses
- As announced in the autumn, the full expensing capital allowance has been made permanent. The government will look at extending this to leased assets as well
- Additionally the threshold for VAT registration is increasing from 1st April, from £85,000 to £90,000. The de-registration threshold is also increasing from £83,000 to £88,000
- The aim is to lower the tax burden (and its administration) on businesses
- However, a number of R&D tax credits are due to end in April and have not been extended
- And Corporation Tax is still 25% (19% for the “Small Profits Rate”). Again, the brackets are not increasing with inflation
- Overall this is likely to lead to an overall increase in the tax that businesses pay, making it paramount that you seek professional advice to ensure you are not paying too much
Investments
- As announced in Autumn, for 2024/25 the ISA & JISA allowances will remain the same (£20k and £9k respectively) with slight changes to allowances for 16 & 17 year olds
- Due to fiscal drag, a lower proportion of your earnings can be invested tax-efficiently
- No changes were announced to investment tax allowances
- Meaning the planned cut to the Capital Gains Tax allowance from £6,000 pa to £3,000 pa is still going ahead from 6th April
- Additionally the Dividend Allowance will drop from £1,000 pa to £500 pa as planned
- The Chancellor did however announce a new ‘British ISA’, providing an extra £5,000 tax-efficient ISA allowance for investments in UK companies
- No details or timelines have been provided, so we can safely assume this is at least 12 months away
- Whilst more tax-efficient allowances are fantastic, it is paramount to have a well-diversified (including globally) investment portfolio that is designed to meet your needs and goals and takes the right level of investment risk for you
- The upper tax rate for Capital Gains on residential property is falling from 6th April to 24% (from 28%). The 18% tax rate will not change
- This should save investors tax when selling property that is not their main home. A number of our clients are selling down their property portfolios and this should make a big difference to people in their situation
- Stamp Duty relief when purchasing multiple dwellings in the same purchase is being scrapped
- The Furnished Holiday Lettings regime will be scrapped from April 2025
- This removes the beneficial tax treatment of holiday homes and brings it in line with the normal residential rental tax regime
Inheritance Tax & Estate Management
- Despite calls from his colleagues a couple of months ago to scrap inheritance tax, the Chancellor has made no changes to the regime or nil rate bands that have been frozen for many years now
- Due to Fiscal Drag, more of your estate will face inheritance tax unless you take action
- From 1st April 2024, personal representatives of estates will not need to have first tried to obtain commercial loans to pay inheritance tax, before they can apply for a ‘grant on credit’ from HMRC
- This should reduce the administrative burden, during what is a very difficult time
Miscellaneous
- Alcohol duty freezes have been extended from August 2024 to February 2025
- Let’s raise a glass to that!
- Fuel duty has been frozen for the 13th year in a row and the 5p cut will remain for another 12 months
- This equates to c.£50 pa in lower costs for the average family
- Tax on vaping will be brought in from October 2026. A one-off increase in tobacco duty will also apply at the same time so people are not incentivised to switch from vaping to smoking
The Economy & Looking Forwards
- The UK economy is expected to grow by 0.8% this year, slightly up on Autumn’s forecast. UK growth is likely to remain lacklustre, with a maximum of 2% forecast until 2028
- Despite the headlines that the UK is set to grow, we must remember we are still in recession and forecast growth continues to remain very low compared to other economies. This is why having a geographically diversified investment portfolio is key
- Inflation is however forecast to reach the Bank of England target of 2% by the end of 2024
- This is a welcome relief to everyone! However we should remember that interest rates will follow fast, meaning that Cash is likely to no longer be King for much longer
- Due to Fiscal Drag, the total tax we will pay this year will still increase, despite cuts to National Insurance rates. Taxes are at their highest level since World War II
- Smart tax planning and organisation to make the most of your various allowances, is crucial to ensuring you have more money to enjoy the things you love doing
- This is where we add significant value to our clients year on year
- The Chancellor however hinted that he would look to continue reducing National Insurance Contribution rates. This could suggest he is planning another pre-election giveaway via an ad hoc statement.
- Watch this space…
What next?
We hope you’ve found this guide helpful. If anything you’ve read has given you pause for thought, and you think you might benefit from a professional opinion, we’ve here to help. Our initial consultations (available as a phone or video call) are complimentary, and we’ll quickly be able to give you a sense of how financial guidance could help your position.
