On the 6 March 2024 the Chancellor Jeremy Hunt delivered his Spring Budget, which is likely to be the last budget before the next General Election. The budget delivered both tax cuts and some tax rises as the Government set out that its election strategy would be focused on fiscal responsibility.

Key Points

The key points from the Budget include:

• Cut in National Insurance Contributions (NICs) – From 6 April 2024, NIC contributions will be cut by 2p in the pound for employees and the self-employed. Class 1 NIC will reduce from 10% to 8% and class 4 self-employed NICs will be cut from 9% to 6%.
• Income Tax and National Insurance – There was no change to the salary thresholds at which people start paying national insurance and income tax. The personal allowance for income tax will remain at £12,570 and the higher rate threshold will stay at £50,270.
• Corporation Tax – The main rate of corporation tax will remain at 25%.
• Changes to ISAs – The Chancellor announced plans to create an additional UK ISA. This will have an additional £5,000 allowance in addition to the £20,000 ISA limit for savers investing in “UK-focused” shares.
• VAT Threshold – The VAT registration threshold will rise from £85,000 to £90,000 from 1 April 2024.
• Non-UK Domicile Rules – Stealing a march on Labour, the Chancellor announced changes to the ‘non dom’ rules. The current rules will be replaced from 6 April 2025 with a new scheme based on residence.
• Capital Gains Tax (CGT) – The higher rate of CGT for residential property disposals will be cut from 28% to 24% from 6 April 2024. The lower rate will remain at 18% for any gains that fall within an individuals basic rate band.
• Inheritance Tax – The IHT nil rate band will remain at £325,000. The residence nil rate band (RNRB) also stays at £175,000 and the RNRB taper continues to apply until April 2028 if the value of a deceased persons estate is greater than £2 million.
• Child Benefits – Ending what had been a rather controversial ‘cut off point’ for child benefit, the Chancellor announced that full child benefits will be paid to households where the highest earning parent earns up to £60,000. The current limit is £50,000. Partial child benefit will be paid where the highest earner earns up to £80,000.

The Wider Economic Outlook

After the UK dipped into a ‘technical’ recession at the end of 2023, the Office for Budget Responsibility (OBR) has predicted that the UK economy will grow by 0.8% this year and 1.9% in 2025. In welcome news, inflation is forecast to fall below the 2% target by the end of June and is expected to fall further to 1.5% in 2025.

Whilst inflation figures and the predicted economic growth is welcome, the OBR has stated that public debt is projected to increase over the next 12 months, up from 91.7% to 92.8% of GDP.

If you have any questions regarding the changes announced in the Spring Budget, please don’t hesitate to get in touch with your financial adviser. Further information is also available on the Gov.UK website here.