As the electoral pendulum swings, Jeremy Hunt, the Chancellor, is making strides to reinvigorate the Conservative party’s fortunes. At the heart of his recent budget, we see substantial tax cuts targeted at workers and parents.
National Insurance, an ever-pervasive facet of worker’s outgoings, saw a significant 2p cut. This announcement acts as the centrepiece to Hunt’s budget, triggered by a potential saving of around £450 a year for the average employee. The Autumn’s similar reduction compound this saving, doubling it to an impressive £900.
While a cut to income tax was under consideration, this did not make its way to the final budget. In its place, the tax cuts are set to be funded through alternative tax increase avenues. These include higher duties on business class airfares, short-term holiday let owners, vaping products, and tobacco.
Several taxes have seen a freeze under Hunt’s governance. Fuel duty and alcohol duty have been suspended, while an increase in the threshold for child benefit ineligibility has taken place. British ISAs form a part of the Chancellor’s fresh approach, providing an additional £5,000 tax-free allowance for savings invested in UK firms.
Despite facing pressure from Tory MPs to drastically reduce the high tax burden and boost economic growth, the Chancellor’s strategy appears to be clear and tactical.
Key outcomes from Hunt’s recent speech include:
- Tax cuts such as a 2p reduction in National Insurance
- The child benefit threshold increases from £50,000 to £60,000
- Reduced capital gains tax on property
- New ‘British ISAs’ offering tax relief for savers
- Freezes on fuel and alcohol duty
- Enhanced ‘expensing’ relief for businesses
Tax increases have been seen too:
- Scrapping tax perks for holiday lets
- A tax raid on non-domiciles
- Higher duties on vapes and tobacco from October 2026
- Increased duty on business-class airfares
Inflation is set to drop below the 2pc target “in just a few months’ time”, according to the Office for Budget Responsibility, says Mr Hunt. That suggests an improved economic climate sooner than initially forecasted.
Meanwhile, debt as a percentage of GDP, which was predicted to exceed 100pc, now has a forecast to decrease annually, reaching 94.3pc in 2028-29. Predicted economic growth lies at 0.8pc this year, rising to 1.9pc next year – half a percent more than previous projections.
In conclusion, the Spring Statement 2024 brings relief and optimism to many workers and businesses in the UK. However, it remains to be seen if these changes will be enough to turbocharge the country’s economic growth and alleviate the record tax burden.
If you are concerned about how the Spring Budget 2024 will affect your finances, don’t hesitate to get in touch with our team of helpful financial experts.
