With one eye on a forthcoming generalelection, the chancellor has announced a Budget aimed at generating long-termgrowth, with “more investment, more jobs, better public services and lowertaxes”.
While the headlines will inevitablyfocus on Jeremy Hunt’s cut in National Insurance contributions (NICs), manyless headline-grabbing messages will affect millions of families andbusinesses.
Read on to find out who were thewinners and losers from the 2024 Spring Budget.
Winners
Working people
The chancellor said that his Budgetgave “much-needed help in challenging times”, adding “if we want to encouragehard work, we should let people keep as much of their own money as possible”.
Calling NICs a “penalty on work”, Huntannounced a cut in Class 1 NICs, from 10% to 8% from 6 April 2024. These cutsfollow a similar reduction in the rate of NICs announced in the 2023 AutumnStatement.
The chancellor says that these cuts,in conjunction with the reductions announced in the 2023 Autumn Statement,would mean the average worker on £35,400 would benefit from a tax cut of morethan £900 a year.
He also announced that, instead offalling from 9% to 8% as previously announced, Class 4 self-employed NICs wouldfall from 9% to 6% from 6 April 2024. This is in addition to the removal of therequirement to pay Class 2 NICs from the same date.
He added that 2 million self-employed peoplewould benefit, with the average self-employed person earning £28,000 seeing a taxcut of around £650 a year.
The Treasury say that this means UKtaxpayers face the lowest combined basic rate of Income Tax and NICs since theintroduction of the modern structure of National Insurance in 1975.
Parents earning Child Benefit
The chancellor highlighted the “unfairness”in the current Child Benefit system that means a household with two parentseach earning £49,000 a year will receive Child Benefit in full, while ahousehold earning less overall but with one parent earning more than £50,000will see some or all of the benefit withdrawn.
Consequently, he announced a plan to movethe High Income Child Benefit Charge to a “household” system from April 2026.
In the interim, from April 2024, the HighIncome Child Benefit Charge threshold will rise from £50,000 to £60,000 while thetop of the taper will rise to £80,000. This means that the full amount of ChildBenefit will not be withdrawn until individuals earn £80,000 or more.
The government estimates that nearly 500,000families will gain an average of £1,260 in 2024/25 as a result.
The hospitality industry and theircustomers
In a move designed for “backing theGreat British pub”, the chancellor has extended the freeze on alcohol duty. Thefreeze was due to end in August 2024 but has been extended to February 2025,benefiting 38,000 pubs across the UK.
The Treasury says that this results in2p less duty on an average pint of beer than if the planned increase had goneahead.
This measure will cut costs forbreweries, distilleries, restaurants, nightclubs, pubs, and bars.
Motorists
The chancellor argued that lots offamilies and sole traders depend on their cars and so wanted to continuesupporting motorists.
Consequently, he maintained thetemporary 5p cut in fuel duty and froze the duty for another 12 months.
Hunt said that this would save theaverage car driver £50 in 2024/25.
Small businesses
In a boost to small businesses, Huntannounced that, from 1 April 2024, the VAT threshold would increase from£85,000 to £90,000 – the first increase in seven years.
ISA and National Savings andInvestments savers
To encourage investment in smallBritish businesses, the chancellor announced his intention to launch a new “UKISA”.
This will enable savers to invest anadditional £5,000 in a tax-efficient wrapper, increasing the total ISAsubscription limit to £25,000 – assuming these additional monies are investedexclusively in UK firms.
The government will consult on thedetails.
The chancellor also announced thatNational Savings & Investments (NS&I) will launch a British SavingsBonds product that will offer consumers a guaranteed interest rate, fixed forthree years.
This new NS&I product will bebrought on sale in early April 2024.
Creative industries
From film to theatre and music to art,UK creative excellence is unmatched.
To support the UK’s creativeindustries, the chancellor announced a further £1 billion package of additionaltax relief over the next five years, to boost inward investment and attractproduction companies from around the world.
Hunt also confirmed £26.4 million ofsupport for the globally renowned National Theatre.
Pensioners
The Spring Budget also committed tosupporting pensioner incomes by maintaining the State Pension “triple lock”.
In 2024/25, the Treasury say that thefull yearly amount of the basic State Pension will be £3,700 higher, in cashterms, than in 2010.
Sellers of second homes
Capital Gains Tax (CGT) is often duewhen an individual sells a second home – such as a buy-to-let property orholiday home.
In a move designed to increase thenumber of transactions, and consequently increase the revenue from the tax, thechancellor announced he would reduce the higher rate of property CGT from 28%to 24%.
The lower rate will remain at 18% forany gains that fall within an individual’s basic-rate band.
Losers
Vapers and smokers
In an attempt to discouragenon-smokers from taking up vaping, and to increase revenue for the NHS, thechancellor announced a new duty on vaping.
The Treasury says this will raise£445 million in 2028/29.
There will also be a one-off tobaccoduty increase of £2 per 100 cigarettes or 50 grams of tobacco from 1October 2026 to maintain the current financial incentive to choose vaping oversmoking. The government say this will raise a further £170 million in 2028/29.
Non-economy airline passengers
The chancellor announced that ratesfor individuals flying premium economy, business, and first class and forprivate jet passengers will increase by forecast Retail Prices Index (RPI) andwill be further adjusted for recent high inflation to help maintain their real-termsvalue.
Some “non-doms”
In a move borrowed from Labour, thechancellor announced the abolition of the “remittance basis” of taxation fornon-UK domiciled individuals (“non-doms”) and a replacement simplerresidence-based regime.
Individuals who opt into the newregime will not pay UK tax on any foreign income and gains arising in theirfirst four years of tax residence, provided they have been non-tax resident forthe last 10 years.
This new regime will commence on 6April 2025 and applies UK-wide – and transitional arrangements will apply.
The Treasury says that this measure willraise £2.7 billion in the year 2028/29.
Owners of holiday lets
The chancellor said that the current taxregime creates distortion, meaning there are not enough properties availablefor long-term rental.
Consequently, he intends to abolishthe Furnished Holiday Lettings (FHL) tax regime from 6 April 2025, meaningshort-term and long-term lets will be treated the same for tax purposes.
Anyonesubject to fiscal drag
Freezing taxthresholds increases the amount of tax that individuals and businesses pay withoutnominal tax rates actually increasing. Called “fiscal drag”, this results inadditional revenue to the government as more taxpayers are “dragged” intopaying tax, or into paying tax at a higher rate.
Freezes in arange of thresholds mean that millions of individuals and businesses will face“fiscal drag” in the coming years.
For example,while the increase in the threshold at which small businesses and self-employedpeople have to register for VAT will be welcome to many businesses, the factthat the threshold had been frozen for seven years means that more businesseswill likely have been forced to register for VAT than if the threshold hadrisen each year in line with the cost of living.
Similarly,freezes to the Income Tax Personal Allowance and thresholds mean more peoplewill either start to pay tax, or pay more tax at a higher rate, than if thesethresholds had risen in line with inflation.
Getin touch
If you have any questions aboutwhether you are a winner or a loser from the Spring Budget, and how it willaffect you and your finances, please get in touch.
All information is fromthe Spring Budget document published by HM Treasury.
The content of this Spring Budget summary is intended for generalinformation purposes only. The content should not be relied upon in itsentirety and shall not be deemed to be or constitute advice.
While we believe this interpretation to be correct, it cannot beguaranteed and we cannot accept any responsibility for any action taken orrefrained from being taken as a result of the information contained within thissummary. Please obtain professional advice before entering into or altering anynew arrangement.
