Today, Jeremy Hunt has delivered the Spring Budget to parliament, addressing how the government will continue to help grow the UK economy.
Tax, National Insurance & Income Support
National Insurance for workers will be cut by 2p from 6th April 2024, saving around £450 per year for the average worker. There was also a 2p cut in 2023.
Jeremy Hunt also announced that the non-domestic tax status will be ‘abolished’, and replaced with a modernised system in April 2025. Currently, this allows people who live in the UK but have links overseas to not pay tax on worldwide income, but the new change would see people needing to pay the same tax as other UK residents.
Inflation and the Economy
The Office for Budget Responsibility predicts that the UK economy will grow by 0.8% this year, and grow a further 1.9% in 2025.
Additionally, the UK’s inflation rate is forecast to fall below the 2% target in the coming months. This is a positive sign, as it was previously not estimated to reach the target until 2025. The Bank of England is aiming to keep inflation low as a long term target.
There will be an allocated fund of £120m for green industries to develop technologies to help carbon capture. Although the government planned for a cleaner energy system in the Energy Bill 2022-2023, the government will also be investing in two nuclear sites to develop a nuclear power station.
Savings
A new form of ISA has been announced, a British ISA, giving £5,000 extra tax-free allowance. It is hoped the new account will encourage people to invest in UK assets.
Public Services
A public sector productivity plan is underway, which will outline matters such as cutting time spent form filling by doctors by using the help of AI, digitalising hospital procedures and improving the NHS app. These changes will hopefully make the NHS more efficient, saving time and allowing services to help more people.
Business
The threshold for businesses to register for VAT is increasing from £85,000 to £90,000 from April 2024. This is predicted to help businesses across the UK, saving both time and money.
Transport
The fuel duty will be frozen again, with the 5p cut in fuel duty on petrol and diesel to continue for another year, previously due to end in March 2024.
Property
The higher rate of property capital gains tax will be reduced from 28% to 24%. Additionally, the current stamp duty relief for people buying more than one property is being scrapped.
Disposable Vape Ban
Announced in February, disposable vapes will now be banned, with restrictions on flavours sold and how they are displayed in shops. What’s more, there will be a vaping products levy paid on imports by manufacturers, in a bid to discourage children from buying the products and help public health.
The freeze on alcohol duty will continue until February 2025, which was previously due to end in August 2024. This has been extended to help British pubs – estimated to support over 38,000 pubs in the UK.
Child Benefit
There will be a new rule to make child benefit apply to the collective household income, currently based on an individual basis, in April 2026. In the meantime, the threshold will increase from £50,000 to £60,000.
If you want to discuss how these changes will affect you or your business, or if you need business advice, help with business accounting or support on tax, get in touch with our specialist accountants at James & Uzzell today to see how we can help.