United Kingdom: Spring Budget 2024

However, given the limited fiscal headroom shown through The Office of Budget Responsibility’s (OBR) economic report, the Chancellor’s plans for a pre-election Budget tax giveaway had to be somewhat reined in. 

 

The OBR report said the economy “has emerged from the twin global shocks of the pandemic and Russian invasion of Ukraine into a period of declining inflation but stagnating output”. With inflation receding more quickly than expected and markets expecting a sharper decline in interest rates later this year, this “should enable a faster recovery in living standards from last financial year’s record decline”. However, the medium-term economic outlook “remains challenging”. 

 

One of the Chancellor’s most significant announcements was a 2p cut to National Insurance contributions (NICs) in April, on top of the 2p he already cut in last year’s Autumn Statement. Workers will see their NIC rates fall by four percentage points in less than six months.

 

Other personal measures included extending the freeze and 5p cut on fuel duty for a further 12 months, cutting the higher capital gains tax (CGT) rate on residential property sales (from 28 percent to 24 percent), and reforming the high income child benefit charge (HICBC) to increase the threshold (from £50,000 to £60,000) and make the system fairer for single-earner households.

 

The VAT threshold will also rise from £85,000 to £90,000 in April, reducing the administrative burden for tens of thousands of businesses.

 

To pay for these changes, the Chancellor announced several revenue-raising initiatives, such as replacing the current tax regime for non-domiciled individuals (non-doms), a new levy on vaping products and an extension of the windfall tax levy on oil and gas companies. Hunt also abolished the furnished holiday lettings relief, claiming this move would raise capital and improve the availability of long-term rental properties.