2024 Spring Budget: Responsible and Prudent?

On Wednesday 6th March, Jeremy Hunt delivered the 2024 Spring Budget in the House of Commons, and the full budget was later released by the Treasury. Caroola's experts have analysed this budget in detail, and we are now here to break down some of the key points addressed, what they might mean for our clients and employees, and some thoughts on these matters.


National Insurance

Perhaps the biggest talking point both before and after the budget coverage was the 2p cut to National Insurance. In this instance, the rumours proved true. Hunt announced that National Insurance contributions would fall from 10% to 8% for traditional employees, and from 8% to 6% for self-employed workers.

Before this was confirmed, one rumour that was covered in Caroola's 2024 Spring Budget Rumours piece debated whether we would receive a tax cut in the form of National Insurance or Income Tax. From what we can tell, it appears that National Insurance was chosen because this is a tax cut that only applies to, and therefore benefits, working people. This move marks one of several measures the Treasury appears to be taking to make going into work the most rewarding option for more people of working age in this country.

While this announcement is undoubtedly viewed positively by many, there are others who would argue that the Treasury does not necessarily have the funding needed to allow a 2p cut to NI, particularly after the initial 2p cut we received at the start of the year. Many would also say that they would be happy to pay more in tax in return for more funding in public services like the NHS and the education sector. On top of this, there been a reported dissatisfaction among pensioners, who mostly do not pay NI and therefore will not benefit from this tax cut, whereas they would have benefitted from cuts to income tax. This could, in turn, have unfortunate consequences for the Conservative Party in the next election, as Over-65s make up a large portion of the voting population and many of their votes are influenced by policies affecting their pensions.


Capital Gains Tax

One notable theme throughout the spring budget coverage was a desire to stimulate the economy. One way in which the current government is hoping to do this is by incentivising owners of additional properties (such as second homes and buy-to-let property) to sell these properties. This would generate more transactions in the property market and benefit people looking to move house or get onto the property ladder. To make selling additional homes a more appealing prospect, the Chancellor announced a cut in Capital Gains Tax (CGT) from 28% to 24%.

In real terms, this means that if, for example, you were to sell a rental property, and £15,000 of the profit you made on the selling of that property was subject to this higher rate of CGT, you would go from having to pay £4,200 in to only paying £3,600. As the amount of CGT-applicable profit goes up, the difference in savings from the CGT rate reduction becomes more significant.

For people who own assets where CGT applies (particularly those who may have been looking to sell), this is a welcome change. However, as it only applies to people who have a high enough total income to be in the higher and additional tax bands, some would argue that this tax reduction results in more money being saved by the rich while the poor continue to struggle with ever-increasing cost-of-living financial burdens.


VAT Registration

Perhaps one of the more surprising occurrences in the Spring Budget was the long-overdue acknowledgement of the rising costs of goods and services, and how those costs are pushing smaller businesses into having to become VAT registered against their owners’ wills. To help tackle this issue, Jeremy Hunt announced that 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. Jeremy Hunt claims that this change will allow 28,000 small businesses across the UK to stop having to pay VAT.

This news was met with mixed reactions among business owners and sole traders, as well as economic experts. On the one hand, the past seven years has seen sharp rises to inflation, and the Treasury finally acknowledging this and making a move to compensate for the fiscal drag this has caused is a welcome development. On the other hand, the Federation of Small Businesses had wanted to see a further increase – ideally to at least £100,000 – to account for the financial hardships small businesses have incurred over the past seven years of economic inflation.

Jeremy Hunt has stated privately that the threshold could not be increased any further because of restrictions imposed by the EU. As such, this is perhaps a change that was largely out of the UK Treasury’s hands.


This budget did not have much new to say on the topic of state pensions. The main point of note is that the government plans to support pensioner incomes by continuing to adhere to the triple lock (where the state pension rises each year by whichever the highest percentage is of the following three:

  • 2.5%
  • Average wage growth between May and July (compared to those same three months in the previous year)
  • Inflation (according to the consumer prices index measure in the year up to September))

According to the budget, the full yearly amount received by those on the basic state pension will be £3,700 more than what was received in 2010, which is nearly £1000 more than what it would have risen by if it had been increased by rate of inflation alone, or if it had been increased by average wage growth alone.

Umbrella Companies

As many of our clients and employees know, there is very little currently available regarding proper government legislation for umbrella companies and umbrella employment. One of the primary reasons why being a trusted partner of APSCo has been so important here at Parasol is because APSCo provides the compliance standards we base much of our integrity on.

Thankfully, this budget appears to have some good news for us on that front. The government has declared a commitment to protecting umbrella employees by ensuring fair, genuine competition in the market and preventing tax non-compliance. With regard to preventing tax non-compliance specifically, they have also promised an update on recent consultations on this topic during Tax Administration and Maintenance Day (18th April). Lastly, new guidance is also set to be published in the summer to support workers, recruiters, and others who use umbrella companies.

Although this all sounds promising, we would have liked to have seen more specific details, particularly regarding umbrella company standards and tax compliance concerns. Our Director of Compliance, Chris Bloor, says: “[This update is] something that I welcome, but I still remain a little bit cautious with regards to what they mean by ‘guidance’ ... we still don’t have a definition of what an umbrella company is, and it’ll be interesting to see whether there will be a further consultation on that.” Despite this, we remain cautiously optimistic about what changes the next few months may bring.

You can watch Chris Bloor’s full statement in this LinkedIn post.


It would be fair to say that our opinions on the 2024 Spring Budget are somewhat mixed. On the one hand, certain tax cuts and threshold increases are nice news for sole traders and small business owners to hear, and the small amount of noise on regulation standard setting for the umbrella employment industry are encouraging. On the other hand, we question whether these small tweaks in taxes and otherwise maintaining of the status quo are enough to address some of the bigger, nation-wide issues affecting all of us. As this is an election year, there is no doubt that much of the budget was planned around winning public approval. Will the Chancellor’s methods prove effective? We will have to wait and see.

If you have any questions about how this will affect you, please get in touch.

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