Spring Budget 2024: What you need to know

What you need to know about the Government’s spending and taxation plans.

The likely last Budget before a general election was announced on Wednesday 6 March 2024. Expectation was Chancellor Jeremy Hunt would be doing what he could to tempt voters to stick with the current Conservative government.

The big news was a cut to National Insurance – though there are questions of how it’ll be paid for. Though there were some tax increases announced, it’s likely either cuts to public services or future personal tax increases will be needed to balance things out.

Here are the policies that could make a difference to you and your finances.

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Inflation

The Chancellor announced that the Office for Budget Responsibility (OBR) predicts inflation will drop to below 2% in a few months time – though that’s the same as the Bank of England predicted at the start of this year.

Personal tax

Another National Insurance cut

We knew this one was coming, with the policy leaked in the days before the official announcement. It’ll be hoped by the Conservatives that it’s enough to woo voters.

It’ll start on 6 April 2024, and will see another 2% drop in National Insurance (NI), which follows the same reduction at the start of the year. It means the going rate will be 8% on earnings between £12,570 and £50,270, averaging £450.

Self employed Class 4 NI contributions will fall from 8% to 6%. This is on top of a 1% cut and the axing of Class 2 NI which were announced in September to begin this April.

Importantly it’s just those people who get a salary who will benefit, which means retired people won’t see any benefit as pensions aren’t included. Nor is income from savings or things like investments or property.

However, unlike cutting Income Tax instead, this will mean those in Scotland will benefit.

Though the average saving is £450, it’ll vary depending on how much you earn. Here’s what this extra cut means for some example salaries (source: Interactive Investor):

Basic rate

Salary	£      20,000	£      30,000	£      40,000	£      50,000
Current NI (10%)	£           743	£        1,743	£        2,743	£        3,743
After NI reduction to 8%	£           594	£        1,394	£        2,194	£        2,994
Tax saving	£           149	£           349	£           549	£           749

Higher rate

Salary	£          60,000	£          70,000	£          80,000	£          90,000	£        100,000
Current NI at 10%	£       3,964.60	£       4,164.60	£       4,364.60	£       4,564.60	£       4,764.60
After NI reduction to 8%	£       3,210.60	£       3,410.60	£       3,610.60	£       3,810.60	£       4,010.60
Tax saving	£          754.00	£          754.00	£          754.00	£          754.00	£          754.00

So that looks like a good move for those who benefit. However, with the Income Tax thresholds remaining frozen until 2028, increased earnings will mean more people fall victim to “fiscal drag” and pay higher rates of tax on some of their earnings.

Though there’s still a net gain for higher earners, lower earners will effectively be worse off even with the two cuts to National Insurance, according to the Resolution Foundation.

Savings & investments

British Savings Bond

This new 3-year bond from NS&I will be government backed. It won’t be tax-free, so whether it’s worth it will depend on the rate. NS&I say it’ll be mid-priced, so it’s unlikely to be market leading. At the moment the top paying three year fix pays 4.65%. It’ll be launched in April 2024.

New £5,000 UK ISA allowance

As rumoured a while back, a new UK ISA will allow an additional £5,000 to be invested in UK assets and all profits and earnings tax free. This will be on top of the £20,000 annual ISA allowance which stays the same. There’s no news on when this kicks in, as the government will consult on how this will work.

Lifetime ISA

Despite promising noises about changes to the LISA, there was nothing announced. So for now the 6.25% effective penalty if you withdraw money for anything other than buying your first home or retirement remains. And the £450,000 cap on property value stays the same too.

Childcare

Changes to Child Benefit thresholds

This has been a huge issue for parents. Until now Child Benefit is gradually withdrawn when one parent earns more than £50,000, though could remain at the full rate if both parents earned £49,000. Now this High Income Child Benefit Charge (HICBC) be household based from April 2026, subject to consultation.

In the short term, from April 2024 it’ll increase to £60,000 per parent, and the taper where it’s gradually reduced will increase to £80,000 (currently £60,000). This will benefit 170,000 families.

Fuel, smoking and drinking tax

New vaping tax

In what the government expects to raise £500m a year, a new tax will be levied on vaping products on top of VAT from October 2026. It’ll be similar to taxes on tobacco.

Tobacco duty increase going ahead

There will be a one-off hike in tobacco duty at the same time as the vaping tax.

Fuel duty frozen

Once again, the 13% increase planned for April will not go ahead and current rates will be frozen for 12 months. Also extended is the the “temporary” 5p cut per litre that was introduced in 2022. Of course, petrol prices can still go up if the actual cost of fuel increases.

Alcohol duty frozen

The Alcohol Duty freeze will be extended to February 2025. This will be for prices in pubs, restaurants etc.

Debt support

Household Support Fund extended

This scheme provides local councils with discretionary funds to give to those who are really struggling. It was due to end on 31 March but has been extended with another £500m for six months. Here’s how you can apply.

Budgeting loans

1 million households on Universal Credit take out interest free budgeting advance loans. The repayment period will be extended from 12 months to 24 months, meaning less will be taken from these benefit payments each month. This will apply to new loans from December 2024.

Debt support fee scrapped

For those in England, Wales and Northern Ireland who’s debts are bad enough that they require a Debt Relief Order (a less severe alternative to declaring bankruptcy), there’s normally a £90 charge. This will be scrapped from 6 April 2024. Scotland has already done this for the equivalent there.

You’ll also be able to use it on debts of up to £50,000, increasing from the current level of £30,000 from 28 June 2024, while you’ll be able to keep cars valued up to £4,000, rather than the current £2,000.

Property

Capital Gains Tax allowance reduced for second homes

Right now there’s a 28% tax on profits made when people sell a second home. – if you’re a higher rate tax payer. That will reduce to 24% with the idea it’ll encourage more people to sell and therefore generate more tax. For basic rate taxpayers (where the property gain doesn’t move you to a higher bracket) it’ll stay at the current lower rate of 18%.

Holiday let loophole closed

At the moment people who let property for short-term holiday stays can knock mortgage interest off income (something long-term rental properties haven’t been able to do for a while) and access tax relief on things like capital gains when they sell and some purchases such as furnishings.

This Furnished Holiday Let allowance will be scrapped from April 2025. Around 127,000 properties will be impacted and the Chancellor hopes to earn around £300m. There’s also a potential benefit here if it pushes these owners to sell, and puts more housing on the market for buyers.

Multiple home buying stamp duty change

Not one for most of us, but The Multiple Dwelling Allowance reduced the Stamp Duty paid if you bought more than one home at the same – it’ll be abolished.

Other taxes

Hike for duty on non-economy flights

There will be an extra increase to Air Passenger Duty for those who fly in non-economy class seats, so Business, First Class and also Premium Economy. This will be alongside an inflation linked hike for all routes. It looks like this will be from April 2025.

Non-doms tax break scrapped

A Labour policy that’s been picked up. At the moment UK residents don’t pay tax in the UK on income earned in other countries. This will be abolished from April 2025. For new residents there will be a four year period before this kicks in. For existing residents it’ll be staggered.

Energy windfall tax extended

This was introduced in 2022 and had already been extended to 2028. Labour have been pushing for another extension, and now it’s going to happen for an extra year.

Business

VAT threshold to increase

One to help smaller businesses. At the moment turnovers of £85,000 a year mean you have to register for and charge VAT. That’ll increase to £90,000.

This could mean some businesses no longer need to charge customers VAT, which would bring down prices. But in reality, inflation will likely mean increased costs will have driven up prices anyway for many of those who were already registered.