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Budget Summary: Spring 2024

Chancellor Jeremy Hunt spoke for over an hour as he announced his government's plans in the Spring Budget yesterday (6th March 2024). 


Here are my key takeaways:

The government planned to reduce inflation by more than 50% after it had increased to the high of 10.7%.

The OBR's latest figures show that inflation has reduced to 4% with a forecasted further reduction to 2% in just 2 months' time. This may help to relieve some of the pressure many households and businesses are facing.


Energy Prices

The drop in prices from 1st July 2023 still stands and if you have a pre-payment meter, the charges are still in line with those who pay by Direct Debit. No further measures have been announced to help homeowners or businesses with the cost of energy.


The Great British Pub

The Spring 2023 budget saw the Chancellor announce an 11p duty deduction on each pint of draught ale, beer and cider which was due to end in August 2024. This has been extended to February 2025.


Fuel

Fuel Duty is another tariff which has been frozen and had a 5p cut in previous budgets to help with the rising costs of petrol and diesel. Today, the Chancellor announced that the fuel duty freeze and existing 5p cut will be extended for a further 12 months.


VATThe VAT Threshold has been frozen for 7 years, previously being amended each year. The Chancellor announced the VAT Threshold (when registration is mandatory) will be increased from £85,000 per year to £90,000 from 1st April 2025. This equates to an average monthly income of £7,500 but please be aware the threshold is calculated on a rolling 12-month basis.


Employment

Headlines were made as the Chancellor announced Class 1 National Insurance contributions for employees will be reduced by a further 2% to 8% from April 6th 2024, saving an average employee £450.00 per year. Whilst this eases some of the costs employees face, it's worth noting that the National Minimum Wage and National Living Wage will be increasing from April 2024 meaning more employees will cross into the 20% income tax threshold.


Self-Employed National Insurance

Class 4 National Insurances for Self Employed individuals also received a 2% cut from 8% to 6% saving an average individual £350.00 per year starting from the new tax year (6th April 2024).


Pensions

A reform of pensions is planned but no concrete plans were laid out in this year's Spring budget.


Childcare

In the 2023 Spring Budget, it was announced that all children under 5 with working parents are entitled to 30 hours free childcare, if eligible. This will be a staggered approach with 3 & 4 year olds already receiving 30 hours. The cost per child given to nurseries was confirmed so childcare providers can now finalise their plans for the changes.

- From April 2024, 2 year olds will receive 15 hours.

- From September 2024 all children from 9 months will receive 15 hours

- All children from 9 months - 4 years will get the full 30 hours free childcare from September 2025.


Child Benefit

The Child Benefit High Income Charge has been unfair for years and I've spoken about this before. The government are looking at reforming this to a household income level rather than an individual but has also taken immediate steps to increase the income threshold to £60,000 per year.


Great British ISA

The Chancellor announced a new type of ISA called the "New British ISA" which will allow individuals to save a further £5,000 per year tax free in addition to existing ISA tax relief schemes and allowances. The Chancellor also mentioned a new British Savings Bond operated by NS&I but I have yet to see more information around this.


Summary

Overall, this budget was as to be expected with no real surprises and feels politically motivated with whispers of a general election in the not too distant future.


Was there anything you’d hoped to see?

Was there anything missing?




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