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A Guide to the Spring Budget 2024

We bring you all the announcements from Jeremy Hunt's 2024 Spring Budget. From changes to capital gains tax, changes to VAT thresholds and new reliefs for the creative industries there is plenty to get you teeth stuck in to.

Check out our Guide to the 2024/25 Tax Year

The Spring Budget: How it affects your finances

Today, March 6th 2024, Jeremy Hunt delivered what he called “The budget for long-term growth”.  The Spring Budget 2024 outlined the government’s financial plans and economic forecasts for the upcoming year. It included details on government spending, taxation changes, and various policies aimed at achieving economic objectives such as growth, inflation control, and employment.

The Spring Budget will have an impact on both personal and business finances. Changes to areas like taxation and spending directly influences the economic landscape for individuals and companies and impacts on how we plan our finances.

How the Spring Budget affects personal finances

  1. Taxation: Changes in income tax rates, thresholds, and allowances directly affect how much money individuals take home.
  2. Benefits and Credits: Adjustments to benefits, tax credits, and pensions impact the financial support available to individuals and families. An increase in these can provide more financial security to lower-income households.
  3. Savings and Investments: The budget might include changes to ISA (Individual Savings Account) limits, pension contributions, and other savings incentives, affecting how people save and invest.
  4. Cost of Living: Decisions on VAT, fuel duty, and other indirect taxes, influence the cost of everyday goods and services, affecting household budgets.

How the Spring Budget affects business finances

  1. Corporate Taxation: Changes to corporation tax rates and reliefs can impact business profitability.
  2. Business Incentives: Announcements on grants, loans, and tax reliefs for businesses, especially SMEs and start-ups, can provide vital support for development, research, and expansion efforts.
  3. Employment Costs: Changes to National Insurance contributions, the National Living Wage, and other employment taxes affect the cost of hiring and maintaining staff.
  4. Sector-Specific Measures: Budgets often include targeted measures for specific industries, such as hospitality, technology, or manufacturing, which can influence business operations and strategic planning in those sectors.
  5. Investment and Infrastructure: Announcements regarding public spending on infrastructure, technology, and innovation can create opportunities for businesses involved in these areas or benefit from improved infrastructure.

The quick-read highlights from the Spring Budget 2024

  • 2p reduction in National Insurance contributions
  • Day to day spending increase kept at 1%
  • Windfall tax on oil and gas extended to raise more money
  •  “Non-dom” tax status abolished with a new scheme to be put in place
  • Child benefit salary threshold increased
  • A new tax on vapes and increasing tobacco duty to encourage smokers to transition to vaping
  • Extending the freeze on fuel duty and alcohol
  • Tax relief for holiday lets scrapped
  • Extra £2.5 billion for NHS this year to utilise technology and AI to improve efficiencies
  • A surprising change to capital gains tax on residential property

What are the benefits of the 2p National Insurance Cut?

Before the Spring Budget started it was announced that Chancellor Jeremy Hunt was poised to reveal a 2p decrease in National Insurance contributions.  He did just that. This move represents the Chancellor’s second effort to lower employment taxes within a year, following a similar 2p reduction announced in the previous autumn statement. Reports suggest this strategy will offer an average saving of £450 annually for earners. With a freeze on the income thresholds for National Insurance contributions, individuals earning around £50,000 stand to benefit the most.

THE DETAILS: From April 6th employee national insurance will be cut from 10% to 8% and self employed national insurance from 8 to 6%.

National Insurance is a critical funding source for state benefits including the pension. As reported by The Independent, here’s a breakdown of how a 2p reduction in National Insurance might affect take-home pay for employees based on various annual incomes:

  • £15,000: Your take-home pay would increase from £14,235 to £14,320 in 2024/25, a boost of £85.
  • £20,000: Expect an increase from £17,660 to £17,920, netting an extra £260.
  • £25,000: Take-home pay would rise by £435, from £21,085 to £21,520.
  • £30,000: You’d see a £610 improvement, with pay going from £24,510 to £25,120.
  • £35,000: A £785 increase is on the cards, moving from £27,935 to £28,720.
  • £40,000: Expect a jump of £960, from £31,360 to £32,320.
  • £45,000: Take-home pay could rise by £1,135, from £35,920 to £34,786.
  • £50,000: A significant £1,310 increase, from £38,210 to £39,520.
  • £55,000: You would see an improvement of £1,320, with pay moving from £41,138 to £42,457.
  • £60,000: Another £1,320 hike, taking you from £44,038 to £45,357.
  • £65,000: Your pay would increase by £1,320, from £46,938 to £48,257.
  • £70,000: Expect a £1,320 rise, from £49,838 to £51,157.

What does this mean for someone’s personal finances?

This will increase an employee’s and self-employed person’s net pay, the amount of money you “take home” after tax. This means more disposable income for households, which can be spent, saved, or invested.

Those who choose to spend: Increased disposable income can lead to higher consumer spending, which is beneficial for economic growth. People may choose to spend extra money on goods and services, thereby supporting businesses and potentially leading to job creation.

People who choose to save and/or invest: Some individuals may choose to save or invest the extra income gained from the cut. This could mean more contributions to savings accounts, ISAs, pensions, or other investment vehicles, contributing to personal financial resilience and future security.

Top Tip: However you choose to use this saving, do so with intent so that it can be put to good use. Often with small increases we let them sink to the bottom by increasing expenditure elsewhere. Either treat yourself, save for something you need, use it to top up your emergency pot or put it in to a savings account. 

Vaping & Tobacco Duties

The UK will introduce an additional tax on vaping products starting in October 2026, aiming to raise the cost and discourage non-smokers from adopting the habit. There will also be a single increase in tobacco duty at the same time to keep vaping as a financially preferable option to smoking. This duty, set to commence in October 2026, aims to “dissuade non-smokers from beginning to vape,” Hunt stated.

Air Passenger Duty

There will be an increase in Air Passenger Duty for business class travellers with no details of how much and when. There are three bands for air passenger duty,  a rate for economy, business class seats, and a higher level for private jets. A small rate increase for business class travel from 1 April was already announced so we will await more details.

Alcohol Duty

The alcohol duty freeze has been extended until February 2025.

Fuel Duty

The fuel duty freeze will continue for another 12 months, saving the average car driver £50 next year. Additionally the “temporary” 5p cut stays in place at 53p per litre.

The Great British ISA (Individual Savings Accounts)

Chancellor Hunt unveiled two strategic initiatives aimed at bolstering investment in UK stocks by individuals and pension funds.

The introduction of a “British ISA” is a new initiative that allows an investor to contribute an extra £5,000 a year in UK equities, extending beyond the current ISA allowances. It promises all the tax benefits associated with traditional ISAs, offering British savers a unique opportunity to participate in the growth of the nation’s most promising companies.

Additionally, the Budget mandates greater transparency from local authorities and defined contribution (DC) pension funds regarding their investment in UK shares. This move aims to highlight and potentially increase the proportion of assets these entities invest domestically. Currently, UK pension funds allocate a mere 4% of their assets to UK shares, a figure Hunt’s measures seek to enhance.

These proposals are crafted not only to foster a deeper engagement with the UK stock market but also to provide individuals with expanded avenues for tax-efficient savings and investments. For savers and investors, this could mean enhanced potential for growth and diversification in their investment portfolios, aligning personal financial growth with the broader economic prosperity of the UK.


Work in TV or Film? There is news on tax reliefs

Alongside Chancellor Hunt’s focus on  encouraging investment in UK stocks he also wants to boost the creative industries in the UK with enhanced tax reliefs. These measures are designed to strengthen business finances across various sectors, including film, television, and theatre.

Following the introduction of the much-anticipated ‘indie tax credit,’ UK-qualifying films with budgets of up to £15 million will now benefit from a tax relief of 40%. This move is aimed at revitalising the domestic production sector. This will apply for the visual effects sector in British films and high-end television productions. This is on top of the 5% increase in the tax credit rate available to the industry announced in the Autumn budget.  Moreover, the previous 80% cap on visual effects costs will be abolished, further supporting production budgets.

For the theatre industry, the Chancellor has cemented performing arts tax reliefs, setting them permanently at 45% for touring productions and 40% for non-touring productions. These incentives are poised to bolster the financial health of the creative sector, encouraging more productions and enhancing the cultural landscape.

Together, these measures are expected to stimulate greater investment in the UK  and stimulate growth of creative industries. For businesses operating within these sectors, the increased tax reliefs and incentives represent an opportunity to reduce costs, invest in development, and potentially achieve higher profitability. This strategic approach aims to foster a thriving business environment, encouraging both cultural enrichment and economic growth.

Reforms to property taxation in the 2024 Spring Budget

Capital Gains Tax on property

From April 2024 the higher rate of property capital gains tax is to be reduced from 28% to 24%. Jeremey Hunt says the move is predicted to increase revenues as there will be more transactions “firing up the residential property market and supporting thousands of jobs that rely on it.”

Holiday Home Landlords

Chancellor Hunt has announced plans to eliminate tax incentives that currently favour second home owners who lease their properties as holiday homes, over offering them as long-term rentals. The furnished holiday lettings regime will be scrapped, the aim is to encourage more properties to be available for long-term tenants, potentially impacting the housing market and availability.

Stamp duty relief for multiple dwellings purchases

In a move to address tax relief abuse, the Chancellor will also remove the stamp duty relief for purchasers of multiple dwellings. This measure targets the exploitation of the system, potentially affecting those buying property as an investment or looking to acquire second homes.

UK’s windfall tax on oil and gas

Additionally, the Chancellor intends to prolong the UK’s windfall tax on oil and gas company profits until 2029. This extension could have broader implications for energy prices and government revenues, indirectly affecting personal finances through energy costs and tax allocations.

These adjustments in the budget are part of a broader effort to address housing availability, energy sector taxation, and the equitable treatment of tax reliefs, all of which could have varying impacts on individuals’ financial planning and housing market dynamics.

Overhaul of Non-Domiciled Tax Status

The Chancellor announced a significant overhaul of the tax system for non-domiciled residents in the UK, often abbreviated to “non-doms”. The current non-dom tax status, which offers tax advantages for wealthy foreign residents, will be abolished and replaced with a new residency-based system starting from April 2025. Under the new system, individuals arriving in the UK will enjoy a tax exemption period for their first four years. After this grace period, they will be subjected to the same tax regulations as UK nationals. This reform aims to create a “fairer and competitive” tax environment by transitioning to a “modern residency system,” effectively closing the door on the longstanding tax break for non-domiciled.

Enhancements to financial support measures for low-income households

To try to alleviate financial pressure on those receiving Universal Credit, nearly 1 million households that have taken out budgeting advance loans will see a positive change. The repayment period for new loans will be extended from 12 months to 24 months, providing more breathing room for repayment. Furthermore, the £90 charge associated with Debt Relief Orders, an important tool for those in significant debt, will be abolished. This removal of fees aims to make debt relief more accessible.

Additionally, the Household Support Fund, a crucial initiative that enables local councils to assist families through food banks, warm spaces, and food vouchers, is set to continue for another six months at the current funding levels. While charities have praised the extension, it’s noteworthy that this falls short of the two-year extension many had hoped for, highlighting a gap between immediate relief efforts and long-term support aspirations.

The High Income Child Benefit Charge will transition to a household-based assessment by April 2026. In the interim, there’s immediate relief for families as the threshold for the charge increases to £60,000, coupled with a halving of the rate at which Child Benefit is repaid. This adjustment is projected to provide an average boost of £1,260 for approximately half a million working families. This move represents a strategic effort to make child benefit more accessible and beneficial to those who need it most, ensuring that working families receive greater support.

Boosting the UK Tech industry & innovation

Big statements were made in the Spring Budget 2024 around supporting the tech industry, recognising its pivotal role in driving economic growth and enhancing productivity. Key measures announced include:

Extension of full expensing to leased assets: Building on the capital investment relief introduced in the previous budget, the extension of full expensing to include leased assets marks a crucial step forward. This move allows businesses to deduct the full cost of eligible IT equipment, plant, and machinery in the year they are acquired or leased, encouraging investment in new capital. The expansion of the full expensing scheme to cover leased assets significantly bolsters the UK’s competitiveness in capital incentives, providing a welcome boost to businesses.

A new approach to public sector spending focused on technology and productivity: While maintaining existing levels of public spending, the Chancellor has unveiled a new public spending productivity plan. A highlight of this initiative is the full funding of the NHS Productivity Plan with an additional £2.5 billion. Additionally, changes to how the Treasury reviews spending decisions will streamline the allocation of investments in projects aimed at improving the productivity of public services, facilitating more efficient and effective use of resources.

Investment in Tech Clusters across the UK: Demonstrating a commitment to ‘levelling-up’ regions across the country, the Chancellor announced investments designed to support high-tech clusters in various locations. Noteworthy investments include the SaxaVord Spaceport in Scotland, financing for new homes and a health tech cluster in Canary Wharf, and a long-term funding settlement for a development in Cambridge. These investments are intended to catalyse innovation, drive regional economic growth, and position the UK as a global leader in technology and innovation.

These initiatives reflect the government’s strategic focus on leveraging technology and innovation to drive productivity and economic growth, showcasing a forward-thinking approach to nurturing the UK’s tech industry and its contribution to the broader economy.

VAT: no real change just a small increase in threshold

There was an adjustment in the Value Added Tax (VAT) threshold from £85,000 to £90,000, while not reaching the hoped-for £100,000 mark, the change is designed to ease the administrative and financial pressures associated with VAT compliance.

Glossary Term: Value Added Tax, is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, minus any of the costs of materials used in the product that have already been taxed. The standard VAT rate in the UK is 20%, but there are reduced rates for some goods and services, such as children’s car seats and home energy, which are taxed at 5%. Some items, like most food and children’s clothes, are zero-rated, meaning they are taxed at 0%. Businesses add VAT to the price they charge when they provide goods and services to both business customers and non-business customers. If the business is VAT registered and the goods or services are for business purposes, the VAT can often be reclaimed.

You can take charge of your own finances

In response to the Budget, the market’s reaction was notably subdued, largely because most of its contents were anticipated. The FTSE 100 experienced a rise, the pound remained stable, and gilt yields saw minimal fluctuations, indicating that investors implicitly endorsed the Chancellor’s approach. This key statement, coming before the election, carefully avoided the turmoil seen in the 2022 mini-Budget, which had previously unsettled investors.

If you are worried about whether now is a good time to start planning around your finances, well is the perfect time to evaluate your personal finances and ensure you’re making optimal decisions for your financial wellbeing. Whether you are a client of Unividual’s or you are managing your own finances we recognise that changes like this can be daunting. We are always here to talk if you want any support.

For those considering working with a financial adviser there are plenty of clients who have never looked back, just take a look at some of our case studies and a great starting point is our complimentary Guide to Financial Planning. If you are sat there worrying about not finding someone who will understand you and your circumstances that is where we stand out. We serve a diverse range of clients, from tech start ups to highly affluent individuals, offering everyone the same level of professional, bespoke, and innovative service. If you’re considering financial planning or seeking ways to maximise benefits from the new financial year, we’re here to assist. When you’re ready to take the next step, simply complete the form below. Cherie-Anne Baxter, our Marketing Director and one of the business owners, will promptly get in touch with you following your enquiry.

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    Editor: Cherie-Anne Baxter

    Date Article Published: 06/03/2024

    Updated: 21/03/2024

    Approver: Quilter Financial Limited 11/03/2024

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