Spring Statement 2024: The Key Points

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Vicky Parry



6th Mar 2024

Reading Time: 4 minutes

The heat is really on for Chancellor Jeremy Hunt and the Conservative party. Today’s Spring Budget set out the government’s plans for tax and spending over the coming year.

Inflation

“figures show that forecasts from OBR say inflation was 11% when he and Rishi Sunak took office (not mentioning that that was after a number of years of Conservative government.)

The latest figures show inflation at 4%, and the OBR forecasts show it falling below the 2% target in ‘just a few months time’ – a year earlier than forecast in the autumn statement. However, it’s easy for the Chancellor to say this. Currently mortgage rates are going up with indicates that lenders assume inflation, and therefor interest rates, will stay high for a while. We will see in a few months time if the Chancellor is right or just ‘talking the talk’.

Debt Support

Abolition of £90 charge for a debt relief order

For people taking advance loans, he will increase the repayment programme from 12 months to 24 months, he says.

For some people a Debt Relief Order will help. But they cost £90, he says. He will abolish that charge.

Jasmine Birtles says “as the patron of the debt charity Community Money Advice, I am very pleased to see this stupid charge dropped. Right now there are thousands of people needing a Debt Relief Order and many can’t get one as they have no money…of course! So scrapping this is an obvious and helpful move.”

Duty Freeze

Alcohol Duty Freeze has been extended

Fuel

Hunt claims that “if I did nothing fuel duty would raise by 13%” by not doing this and offering a freeze he is claiming action but is in fact doing nothing.

VAT Changes

Tens of thousands of businesses will not need to pay VAT from April as the threshold at which they have to charge VAT will go up from £85,000 to £95,000. Mr Hunt says that this is the first increase in seven years.

New British ISA

And the government will introduce a new “British ISA”, allowing investments of an extra £5,000 in British firms. This ISA allowance will be on top of the existing one.

Its focus will be only on UK assets. Michael Summergill chief executive of AJ Bell say that  The new British ISA is doomed to fail in those objectives – UK retail investors are already putting 50% of their ISA investments into UK assets so the additional allowance will not change investor behaviour” they go on to say that “The aim is laudable, but the British ISA is simply the wrong way to achieve it. If the aim is to boost investment in UK companies, the answer lies elsewhere. For example, extending the existing AIM exemption from stamp duty and/or inheritance tax to a wider pool of UK assets would actually have a meaningful impact.”

NHS Productivity

The government claims it will slash the 13m hours lost by doctors and nurses every year to outdated IT systems. “AI will be used to cut down form filling and operating theatre processes will be digitised”

The Chancellor claimed that antiquated systems delay care. He added: “We will slash the 13 million hours lost by doctors and nurses every year to outdated IT systems. We will use AI to cut down and potentially cut in half form filling by doctors. We will digitise operating theatre processes allowing the same number of consultants to do an extra 200,000 operations a year.

Child Benefit

Mr Hunt announced an increase in the threshold at which parents start paying the High Income Child Benefit Charge, from £50,000 to £60,000. Making almost half a million families better off by an average of almost £1300 per household.

Taxes

There will be a new tax on vaping products from October 2026 and also increase in tobacco taxes.

Tax relief on holiday lettings will be unfrozen to improve availability for long term letting.

Windfall tax will also be extended for energy companies.

Air Passenger Duty on non-economy flights will go up.

Income Tax Cut by 2p

From April 6 NI will be cut by 2p. From 10% to 8% and self-employed NICS from 8% to 6%.

Hunt claims, combined with the changes announced in the autumn statement, 27 million people will gain £900. And 2 million self-employed people will gain £650, the lowest tax since 1975 (Editor‘s note: in spite of a totally different taxation system in 1975 and VAT not even existing yet).

He says the OBR says this will put 200,000 more people in work. And it will increase GDP by 0.4%, he says.

The charity Turn2Us commented that “The reduction in National Insurance will not benefit those on the lowest incomes. What we need is a comprehensive overhaul of the relationship between our welfare system and its beneficiaries. Such reform should begin with adjusting benefits to adequately cover essential living costs and abolishing punitive, ineffective measures like the two-child limit and sanctions.” 

Taxing non-doms

From April 25 new arrivals to the UK will not pay any tax in first four years. After 4 years those who continue to live here will pay the same tax as other UK residents.

 Jasmine Birtles says:

“Honestly, I don’t think that anything Jeremy Hunt says in his Budget will swing the election in the Conservatives’ favour. He could dress up as Santa and distribute sweets for the next six months and it wouldn’t help! However, I would have expected more and bolder acts to improve our economy. He said himself, when cutting the higher rate of capital gains on property sales, that lower taxes would bring in more revenue because it would increase sales. Well, a similar thing happens with income tax where people spend more in the economy and also work harder because they will be able to keep more of the money they earn. I know that raising the income tax thresholds makes an initial big loss in tax revenue but it is quickly replaced by extra revenues from increased productivity. Tinkering with NI payments won’t cut it. We need bold moves starting with raising the income tax thresholds.”

 




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