The Spring Budget 2024
On Wednesday, 6 March, the Chancellor of the Exchequer, Jeremy Hunt, presented the UK Government’s Spring Budget. In the Budget, the Government addresses various economic challenges, including post-pandemic recovery and global inflation. To tackle these issues, they’re implementing policies outlined in their 2023 goals, such as reducing inflation, bolstering growth, and decreasing debt. The Spring Budget aims to continue this trajectory by introducing measures to further lower inflation, which will result in increased real wages and improved living standards. Additionally, tax cuts are being proposed to support the workforce and stimulate economic growth.
The Government is proposing a wide array of actions in the Spring Budget, some of the most important are:
- Increasing VAT thresholds For SMEs
From April 1st, 2024, the VAT registration threshold will increase from £85,000 to £90,000, and the deregistration threshold will increase from £83,000 to £88,000; these thresholds will then be frozen at these levels.
- One-year extension of the energy windfall tax
The windfall tax on North Sea oil and gas companies’ profits is extended for another year, aiming to raise an anticipated £1.5bn. Initially implemented in May 2022 following Russia’s full-scale invasion of Ukraine, which led to surging gas prices and boosted producers’ profits. The tax was slated to end in March 2028 but will now continue until 2029.
- Introducing a new UK ISA
The Government is launching a new UK Individual Savings Account and British Savings Bonds to encourage savings and bolster investment in the UK, offering individuals a £5,000 allowance alongside the existing £20,000 ISA allowance to invest in tax-free UK-focused assets. Consultation on the specifics of the UK ISA will be conducted to ensure its effectiveness in supporting savers and promoting UK retail investment opportunities.
- Annual 1% increase in day-to-day public spending
After 2024-25, departmental day-to-day spending in real terms will increase by an average of 1% annually. Meanwhile, departmental capital spending will adhere to the cash profile outlined in the Autumn Statement 2023, adjusting for new productivity commitments. Consequently, total departmental spending is projected to be £86 billion higher in real terms by 2028-29 compared to the beginning of this Parliament (2019-20).
- Removing the ‘non-dom’ tax status
In an effort to alleviate tax burdens on the working populace, the government aims to impose a slightly higher tax on those with greater financial means by eliminating tax regulations for non-UK domiciled individuals, or non-doms, and instituting a residence-based system. The objective is to establish a contemporary framework where all UK residents residing in the country for more than four years are subject to equal taxation on their foreign income and gains, irrespective of their domicile status, fostering a streamlined, equitable, and competitive tax regime.
- Abolishing the Multiple Dwellings Relief
From 1 June 2024. The Government is scrapping Multiple Dwellings Relief in the Stamp Duty Land Tax regime due to an external evaluation showing it doesn’t effectively support investment in the private rented sector. Transactions with contracts exchanged on or before 6th March 2024 will retain the relief, regardless of completion date, as will other purchases completed before 1st June 2024, with the government consulting the agricultural industry to address any sector-specific impacts.
- Cutting National Insurance Rates
From 6 April 2024, the government will reduce the main rate of employee National Insurance by 2p, lowering it from 10% to 8%. Additionally, the main rate of self-employed National Insurance will decrease to 6%.
- Fuel and Alcohol duties are left unchanged
The government keeps fuel duty rates unchanged for another year by extending the temporary 5p reduction and scrapping the planned inflation-linked increase for 2024-25. Additionally, the government is prolonging the freeze on alcohol duty from 1 August 2024 to 1 February 2025.
To read the Spring Budget in full or any of its supplementary documents, you can follow this link.
