Spring Budget 2024 - Robinsons London

Spring Budget 2024

Spring Budget 2024

March 6, 2024 Lauren Bailey Comments Off

Spring Budget 2024

 

On Wednesday 6 March, chancellor Jeremy Hunt delivered his Spring Budget 2024, only three and a half months after his Autumn Budget 2023. He presented updated forecasts from the Office for Budget Responsibility, reflecting recent economic developments. This was the last budget, and possibly the final fiscal event, before the general election later this year.

During his Spring Budget 2024 announcement in the House of Commons (6th March), he unveiled a package of measures aimed at supporting British workers and businesses, including National Insurance cuts, easing the child benefit income threshold,  and changes to a number of different taxes.

The Chancellor took the opportunity to capitalise on progress with ‘Budget for Long Term Growth’, sticking to the plan by putting over £900 a year back into the average worker’s pocket thanks to changes at Autumn Statement and a second Employee National Insurance tax cut from 10% to 8% in April for 27 million working people.

For 2 million self-employed, there is a second tax cut through a further 2p reduction in the NICs main rate from 8% to 6% – saving the average self-employed worker £650 when combined with cuts at Autumn Budget.

 

Spring Budget 2024 Statement Highlights

 

TAXES

  • National insurance contributions for employees are being cut from 10% to 8% from April – impacting about 27 million workers – with savings of up to £450 a year.
  • Self-employed NI rates will drop by two percentage points as well.
  • Higher rate of property capital gains tax will be reduced from 28% to 24%.
  • The non-dom tax status has been abolished. It means foreign nationals who live in the UK, but are officially domiciled overseas, will no longer be able to avoid paying UK tax on their overseas income or capital gains. A “simpler” residency-based system will arrive in 2025.
  • Stamp duty relief for people who purchase more than one dwelling in a single transaction, known as Multiple Dwellings Relief, is scrapped.
  • The furnished holiday lettings regime has been abolished because it created “a distortion meaning that there are not enough properties available for long-term rental by local people”.
  • Air passenger duty will be raised for non-economy class plane passengers.
  • The energy profits levy– the windfall tax on UK-produced oil and gas – is extended to 2029.

Personal tax cuts since Autumn are worth £20 billion, slashes the effective personal tax rate for an average earner to its lowest level since 1975, and will lead to equivalent of 200,000 more full time workers joining the labour market. The OBR says these reductions will lead to the equivalent of around 200,000 extra full-time workers by 2028/29, as people increase their working hours and move into work. This boost is why the Chancellor has prioritised NICs cuts in his ‘Budget for Long Term Growth’ and why he will continue to do so when fiscally responsible. He set out that his long-term ambition is to end the unfairness of double taxation of work.

 

BENEFITS

  • The High Income Child Benefit Charge, which hits payments if one parent earns above £50,000 a year, is to move to a household-based system. The threshold will rise to £60,000 from April in the meantime. The top of the taper where it is withdrawn is raised to £80,000.

High Income Child Benefit Charge to be assessed on a household-basis by April 2026.  To ensure working families benefit from increasing their earnings before this change is made, the threshold to start paying back Child Benefit will increase in April from £50,000 to £60,000 – a 20% increase which will take 170,000 families out of paying the charge this year – while Child Benefit will no longer need to be repaid in full until earnings exceed £80,000. This represents a £1,260 boost on average for around half a million working families, rising to nearly £5,000 for some families when combined with tax cuts since Autumn Statement. This will put an end to the current unfairness, where two parents earning £49,000 a year receive the full Child Benefit while a household with a single earner on over £50,000 does not. The OBR says the immediate changes to the HICBC will lead to an increase in hours worked equivalent to around 10,000 more people entering the workforce on a full-time basis.

 

  • The household support fund is extended for a further six months.
  • The £90 charge to get a debt relief order is abolished.
  • Repayment periods for people on low incomes who take out new budgeting advance loans will increase from 12 to 24 months.
  • A new British ISA will allow a £5,000 annual investment into in UK businesses. It includes all the tax advantages of other ISAs and will be on top of the existing allowances.
  • A new British Savings Bond, delivered through NSNI, will offer a guaranteed rate – fixed for three years.

 

 

DUTIES: TOBACCO & ALCOHOL & FUEL

  • Vaping liquids Duty will be levied for the first time in October 2026. A one-off increase in tobacco duty will be made at the same time.
  • Alcohol duty freeze has been extended until February 2025. Mr Hunt said the government wants to back British pubs.
  • Fuel duty sees no change, with 5p cut announced in March 2022 still in place.

The average car driver will save £50 this year as the 5p cut and freeze to fuel duty is maintained until March 2025, while pubs, breweries and distilleries will benefit from a further freeze to alcohol duty until February 2025 – which will also save consumers money on their favourite tipple.

 

 

BUSINESS SUPPORT

  • Full expensing for businesses will apply to leased assets in future “when affordable”. Draft bill to be published shortly.
  • VAT registration threshold for businesses upped from £85,000 to £90,000
  • Eligible film studios in England will secure 40% relief on their gross business rates until 2034. Tax relief made permanent at 45% for touring and orchestral productions and 40% for non-touring productions.

SMEs

New tax reliefs and investments will help establish the UK as a world leader in high-growth industries such as the creative sector, advanced manufacturing and life sciences, while 28,000 SMEs will be taken out of VAT registration altogether – encouraging them to invest and grow.

SMEs will be supported to invest and grow through a £200 million extension of the Growth Guarantee Fund, helping 11,000 small businesses to access the finance they need.

 

BUSINESS SUPPORT FOR THE CREATIVE INDUSTRY

The UK’s creative industries will be backed by over £1 billion, including higher tax reliefs to lower the cost of producing visual effects in high-end TV and film, a 40% relief on gross business rates until 2034 will be introduced for eligible film studios, and a new tax credit for independent British films with a budget of less than £15 million. Orchestras, museums, galleries and theatres will also benefit from a permanent 45% tax relief for touring productions and 40% relief for non-touring productions, while £26 million will fund maintenance and repairs at the National Theatre.

 

BUSINESS SUPPORT FOR AUTOMOTIVE AEROSPACE & SCIENCE SECTORS

A £360 million package will support innovative R&D and manufacturing projects across the life sciences, automotive and aerospace sectors – with a further £45 million funding to accelerate medical research into common diseases like cancer, dementia and epilepsy – while the Green Industries Growth Accelerator will be allocated an extra £120 million to build supply chains for offshore wind and carbon capture and storage.

 

BUSINESS SUPPORT FOR TOWNS

Opportunity will be spread across the country with hundreds of millions in funding to extend the Long Term Plans for Towns to 20 new places and a swathe of cultural projects, while local leaders will also be empowered to improve their communities through more devolved powers and a new North-East trailblazer devolution deal which comes with a funding package potentially worth over £100 million to support the region’s growth ambitions.

 

 

THE NHS

  • The NHS to get additional £2.5bn this year to tackle issues including waiting lists.
  • Planned growth in day-to-day public sector spendingt o be maintained at 1% in real terms, but Mr Hunt says “we are going to spend it better”. Includes funding NHS productivity plan “in full” to boost digital transformation.

 

The NHS in England will receive a £2.5 billion day-to-day funding boost for 2024/25 and £3.4 billion in capital investment over the forecast period to help unlock £35 billion in productivity savings over the next Parliament by harnessing new technology like AI and cutting admin workloads – part of landmark Public Sector Productivity Plan to deliver better public services.

The Public Sector Productivity Plan marks the first step towards returning public sector productivity back to pre-pandemic levels and will ensure taxpayers’ money is spent as efficiently as possible. OBR analysis suggests that raising public sector productivity by just 5% would deliver up to £20 billion of benefits a year.

Backed by £4.2 billion in funding, the plan will allow public services to invest in new technologies like AI, replace outdated IT systems, free up frontline workers from time-consuming admin tasks and take action to reduce costs down the line. The NHS will receive £3.4 billion as part of this over the forecast period – doubling investment in digital transformation, significantly reducing the 13 million hours lost by doctors every year because of old IT and delivering test results faster for 130,000 patients a year thanks to AI-fitted MRI scanners that help doctors read results more quickly and accurately. This investment, which comes alongside an extra £2.5 billion cash injection for 2024/25 to support the NHS improve performance and reduce waiting times, means the NHS can commit to delivering £35 billion in productivity savings over the next Parliament, while the £800 million to boost productivity across other public services will deliver an extra £1.8 billion in productivity benefits by 2029.

 

INVESTMENTS

Building on recent investments in the UK by Google, Nissan and Microsoft, Mr Hunt announced exciting new investments in key growth sectors and set out plans to support businesses of all sizes to grow.

  • Significant package of support to establish the UK as a world leader in fast-growing industries over the next five years, including over £1 billion in new tax reliefs for creative industries, £270 million in automotive and aerospace R&D projects focusing, and a £120 million top up for the Green Industries Growth Accelerator to help build supply chains for offshore wind and carbon capture and storage.

 

  • £45 million will fund medical research to develop new medicines for diseases like cancer, dementia and epilepsy, and the UK’s ability to manufacture them will be boosted by plans for a £650 million AstraZeneca investment to build a new vaccine manufacturing hub in Liverpool and expand their footprint in Cambridge – thanks to government support for the life sciences sector.

 

  • Long Term Plans for Towns: Opportunity will be spread across the country with hundreds of millions in funding to extend the Long Term Plans for Towns to 20 new places, over £240 million to build nearly 8,000 homes in Barking Riverside and Canary Wharf alongside a new life sciences hub, and a new £160 million deal to acquire two site to develop nuclear for our energy security.

 

  • North-East trailblazer devolution deal:  Local leaders will be empowered, with a new North-East trailblazer devolution deal which comes with a funding package potentially worth over £100 million in support for the region, and powers devolved to Buckinghamshire, Warwickshire and Surrey.

 

  • Capital Allowance:  Draft legislation will be published within weeks to extend full expensing – a £10 billion tax cut for business every year to help them invest for less – to leased assets when affordable to do so, strengthening one of the most attractive capital allowance regimes of any major country.

 

  • Pensions and savings reforms, including the introduction of a new UK ISA allowing an additional £5,000 annual investment in UK equities tax-free and new British Savings Bonds offering savers a guaranteed rate for 3 years, will deliver better returns for savers.

 

If you have any questions about what the Spring Budget 2024 means for you, or your business, speak to the Robinsons Team

 

 

 

*Credit gov.uk