Economy

Spring Budget 2024

5 min read 8 Mar 24

By M&G Investments

Summary: The Chancellor of the Exchequer, Jeremy Hunt, delivered his Spring Budget on Wednesday 6 March. In this much awaited announcement, the Chancellor started by saying the economy is turning a corner, with inflation expected to fall to target next quarter (by the end of June), wages consistently rising faster than prices and better growth than European neighbours.

This Budget sees more tax cuts for working people offering "much needed help in challenging times", more investment and a plan for better public services.

With it being the last scheduled Budget before the next general election, (expected to take place later this year) let’s see what the main announcements have been and how they might affect you.

Tax and income support changes

National Insurance will been cut by 2p for employees and the self-employed, saving the average worker an estimated £450 a year. When combined with a similar reduction announced last Autumn, this will see an average worker on £35,400 save over £900 a year. This decrease means the effective personal tax rate for an average earner will be at its lowest level since 1975.
Tax rules for those people who are UK residents but have their permanent home (‘domicile’) outside the UK (known a ‘non-doms’) will be abolished. This will ensure that all UK residents who stay in the UK for over four years will pay the same tax on their foreign income and gains.
Introduction of a British ISA, which will allow an additional £5,000 annual investment for investments in UK equities, with all the tax advantages of other ISAs. Hunt states that this will be on top of the existing ISA allowance and ensure that British savers can benefit from the growth of the most promising UK businesses.
Longer repayment period for people on benefits taking out emergency budgeting loans from the government.
Government fund for people struggling with cost of living pressures to continue for another six months.
Child benefit tax charge – The £50,000 limit, where the high-income child benefit tax charge starts to apply, will be increased to £60,000. This is likely to be welcomed by many parents.

Transport and energy

Fuel duty has been frozen again, the 5p cut in fuel duty on petrol and diesel was due to end later this month but has been kept for another year
"Windfall" tax on the profits of energy firms, which had been scheduled to end in March 2028, extended until 2029
Air passenger duty, the tax paid on flights, to go up for business class tickets

Cigarettes, vapes and alcohol

Freeze on alcohol duty, which had been due to end in August, to continue until February 2025
Existing tax on tobacco to increase, to maintain the "financial incentive to choose vaping over smoking"
New tax on vaping products to start in October 2026, following a consultation

Other announcements

There were many announcements in the Spring Budget and you can read the full Budget on gov.uk, but here are a few other key highlights;

Threshold at which small businesses must register to pay VAT raised from £85,000 to £90,000 from April
The higher rate of Capital Gains Tax (CGT) on property is to be reduced from 28% to 24% from April 2024
The government has announced an NHS productivity plan backed by £3.4 billon of funding to make improvements to things like MRI scanners, IT systems and more.

It’s important to know tax rules can change and the impact of taxation, and any tax relief, depends on your personal circumstances.

Getting financial advice and support

It’s likely that the changes in the Spring budget will impact your finances in one way or another. If you are looking for help to navigate any of these changes or to help manage your finances in general, speaking to a financial adviser could be of real value.

A financial adviser will look at your overall situation and longer-term goals to create a manageable plan for you.

If you don’t already have an adviser you can find a financial adviser that's right for you. Visit our ‘Get financial advice’ page to find out more.