Earlier today in the House of Commons, Chancellor Jeremy Hunt delivered the 2024 Spring Budget. We at Parasol were glued to our screens, hoping to hear good news for the financial wellbeing of our clients and employees.
In the lead-up to today, the main rumours circulating the press included a 2p cut to National Insurance, raising the stamp duty threshold, raising the threshold for when child benefit needs to start being paid back, and a temporary freezing of the fuel duty.
While these rumours have been gaining traction, Jeremy Hunt has maintained that his primary focus is on long-term economic growth. While he believes that the best way to grow the economy is by making the UK a low-tax nation, he stated he will only cut taxes in ways that are responsible and prudent.
So, what were the results of all the rumours, speculation, and remarks from the Chancellor? Here are the 2024 Spring Budget highlights.
National Insurance
Perhaps the most exciting announcement for UK employees was the announcement of a further 2p cut to National Insurance, both for salaried employees (taking their NI rate from 10% to 8%) and for the self-employed (taking their NI rate from 8% to 6%). This will result in the average employee saving around £450/year.
Child Benefit
Promising news for parents was also announced. Hunt has declared a desire to make child benefit legislation apply to collective household income, rather than on individual salaries. As this change will involve significant planning, Hunt hopes to be able to introduce this change from April 2026.
In the meantime, Hunt has announced that the salary threshold (after which parents need to start paying a percentage of the child benefit they receive back) will go up on 6th April 2024 from £50,000 to £60,000. Moreover, the upper salary threshold (the point at which parents will not be able to claim child benefit at all) will go up from £60,000 to £80,000.
The Chancellor has stated that the main aim behind raising these thresholds is to encourage more parents to return to work.
Capital Gains Tax
In good news for anybody planning to sell off property for profit, the higher rate of property Capital Gains Tax (which applies if you are a higher-rate or additional-rate taxpayer) will be reduced from 28% to 24%.
Hunt believes that creating more incentive to buy and sell property in this way will lead to more transactions, which will, in turn, increase revenues.
VAT Registration
The business/sole trader revenue threshold for VAT registration has been increased for the first time in seven years, from £85,000 to £90,000. This provides some additional leeway for businesses who would struggle to keep their prices competitive if they had to complete VAT registration. However, some were hoping for the threshold to rise to £100,000, as a £5,000 rise for the first time in seven years does not entirely compensate for the fiscal drag the past seven years of rising economic inflation have caused.
Recovery Loans
The Chancellor has announced that the government will be extending the Recovery Loan Scheme under a new name of the “Growth Guarantee Scheme”. This scheme will run until the end of March 2026, and it offers a 70% government guarantee on loans to small and medium enterprises of up to £2 million in Great Britain, and £1 million in Northern Ireland. The Treasury will be providing £200 million in funding to support this.
ISAs
In an effort to increase investment in UK businesses, the government plans to create a new ‘British’ ISA, which will grant an extra £5,000 of tax-free allowance for any member of the public to invest exclusively in the UK. According to the Chancellor, this will enable British investors to benefit from the growth of promising UK businesses, as well as enable those businesses to expand further with the increased capital they will gain.
Duties and Levies
The increasing and decreasing of various duties and levies was another point of focus in the budget.
The existing alcohol duty freeze, which was due to end in August 2024, has been extended to February 2025. This is particularly good news for pubs, breweries and distilleries across the UK.
The fuel duty, which was a particularly hot topic in the pre-budget rumours, will also continue to be frozen for the next 12 months. On top of this, the government will be extending the “temporary” 5p cut on fuel duty (which was due to end next month). Chancellor Hunt has stated that these measures will save the average car driver around £50 in fuel for the cut’s duration.
In a bid to raise the funds needed for the National Insurance tax cut, the Chancellor introduced a levy to be applied to vaping products, as well as a one-off duty increase in the price of tobacco. These measures are said to have the additional benefits of discouraging non-smokers from taking up vaping, while also encouraging current tobacco smokers to switch to vaping (which will still be a more affordable alternative to smoking).
Finally, a one-off increase will also be applied to Air Passenger Duty (APD) for business-class travellers.
Household Support
The Household Support Fund, which was originally introduced in October 2021 and been necessary enough to be extended a further four times since then, will now be extended to beyond its current cut-off date of 31st March 2024. The extension will be for a further six months, according to Jeremy Hunt. Although this is good news for local councils needing to provide food banks, warm spaces and food vouchers to their most vulnerable residents, many had been hoping that the extension would be granted for a full two years.
Other Announcements
Here are some other Spring Budget announcements that might be of interest to our clients and umbrella employees:
- The furnished holiday lettings regime is to be abolished
- Multiple dwelling relief is to be abolished in June 2024
- Tax breaks for wealthy foreign residents in the UK of non-domiciled tax status (“non-doms” will be scrapped and reformed.
- Loans for household emergencies (like boiler repairs) will have an increased repayment period from 12 months to 24 months. The current £90 charge for debt relief ordered will also be ended.
We will be posting a more detailed budget analysis, here on the Parasol blog, later this week. Be sure to keep an eye on our socials for updates.
