Spring Budget 2024: what Jeremy Hunt’s new financial policies mean for you
We reveal what the Spring Budget is and how chancellor Jeremy Hunt's announcements will affect your finances, including the national insurance tax cut.
Chancellor Jeremy Hunt has announced a raft of new policies during the Spring Budget today (6 March).
This is likely to be the last significant fiscal event before the general election, which is expected to happen this autumn but could be as late as January 2025.
What is the Spring Budget and why is it important?
During the Spring Budget, the UK government reveals how the economy is faring and the latest projections from the Office for Budget Responsibility (OBR).
Most importantly, the government shares its fiscal plans for the next year, with a big focus on taxes and spending.
How will the Spring Budget affect my finances?
The OBR believes that UK inflation should fall from 4% to under the 2% target in two months' time, while the UK economy is expected to grow by 0.8% this year and by 1.9% in 2025.
We’ll now reveal some of the biggest announcements from the Spring Budget and how they’ll affect your money.
National insurance cuts
Hunt has announced that national insurance will fall from 10% to 8% from 6 April.
This comes after a cut in national insurance from 12% to 10% in January, which was announced in the Autumn Statement last year.
However, income tax thresholds will remain frozen, offsetting some of the impact of tax cuts.
Class 4 national insurance for the self-employed will be cut from 8% to 6%.
Hunt says the national insurance rate cut will be worth on average £450 a year for 27 million workers.
“Those above state pension age and earning less than the national insurance threshold of £12,570 will see no difference from today’s cut,” comments Laura Suter, director of personal finance at AJ Bell.
The reason that a cut to national insurance is cheaper than the same cut to income tax is because it benefits fewer people.
Those over state pension age don’t pay national insurance, whereas they do pay income tax.”
New British ISA
Hunt has announced a ‘British ISA’ will be introduced after a consultation so people can invest exclusively in the UK, with an extra £5,000 tax-free annual allowance on top of the current £20,000 allowance.
VAT changes
The VAT registration threshold is rising from £85,000 to £90,000 from April after being frozen for seven years.
Hunt also revealed full expensing will apply to leased assets as soon as ‘he can afford it.’
Non-dom tax status changes
Individuals classified as non-domiciled - or 'non-dom' - are only subject to UK tax on their UK-sourced income, despite their permanent residence being outside the country.
The non-dom status will be scrapped and replaced with a new 'modern residency system’ in April 2025.
The new system will make sure all UK residents who stay in the UK for over four years pay the same tax on their foreign income and gains, regardless of their domicile status.
Changes to child benefits
Currently, when a parent earns £50,000 or more, they start losing their child benefit allowance and must pay it back - and lose all of it when they earn £60,000.
However, if two parents earn over £50,000 together, they will get the full child benefit.
The child benefit threshold will rise to £60,000 with an upper threshold of £80,000 (when the child benefit will have to be fully repaid) from April 2024.
The government forecasts nearly 500,000 families will gain an average of £1,260 in child benefit in 2024-25.
By April 2026, the child benefit system will move to a household-based system.
Property tax changes
Hunt has revealed he will abolish tax breaks that make it more profitable for second homeowners to let out property short-term to holidaymakers instead of to long-term tenants.
So, the furnished holiday lettings (FHL) tax regime will be abolished from April 2025.
Multiple dwellings relief for stamp duty, which applies to buying more than one property in a single transaction, will also be abolished.
Capital gains tax on property will be reduced for residential property from 28% to 24% from 6 April.
Inheritance tax
Before the Autumn Statement in November 2023, there was much speculation that inheritance tax (IHT) would be cut or abolished completely, but this never materialised.
An IHT bill of 40% is usually due if your assets are worth more than £325,000 when you die, but only around 4% of estates currently pay IHT, who are among the wealthiest in the UK.
It was believed that the government would announce IHT reform but instead revealed it will ‘move to a residence-based regime’ and consult on the best way to achieve this.
There will be no changes to IHT before 6 April 2025.
Want to take control of your finances?
If you’re hoping to take advantage of the new proposals in the Spring Budget or want help reaching your financial goals, getting expert help is vital.
Unbiased can quickly connect you with a qualified financial adviser, mortgage broker or accountant who can offer guidance based on your unique circumstances.
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