Spring Budget 2024: What does it mean for you?

Cuts to National Insurance, a tax levy on vaping and scrapping tax breaks for second home owners are among the measures announced by the Chancellor in his Spring Budget today (Wednesday).

In what is the last budget statement before an expected General Election in the autumn, Jeremy Hunt called it a ‘budget for long term growth’.

He said the UK’s rate of inflation was forecast to fall below two per cent in a few months time and said the Office for Budget Responsibility (OBR) predicted the UK economy would grow by 0.8 per cent this year and 1.9 per cent next year.

The key points of the Spring Budget Statement delivered to the House of Commons by Mr Hunt today include cutting National Insurance for workers by 2p from April 6, meaning it falls from 10 to eight per cent, which Mr Hunt says is worth £450 a year for the average worker.

The cut follows another 2p drop last autumn, but there is no change to income tax rates.

“The way we tax people’s income is particularly unfair,” the Chancellor said.

“If we are to build a high wage, high skill economy not dependent on migration… If we want to encourage people not in work to come back to work… We need a simpler, fairer tax system that makes work pay.”

However, new official forecasts say the government will collect 37.1p of every pound generated in the economy in 2028/29 - the highest tax level in 80 years.

Other tax measures included scrapping ‘non-dom’ tax status, which until now meant people living in the UK whose permanent home is overseas did not have to pay tax on income from another country.

The Chancellor also changed the rules on child benefit for higher earners, with full child benefits to now be paid to households where highest-earning parent earns up to £60,000, limit is £50,000 currently. It had been argued the lower rate made life difficult for some working families.

There is now a longer repayment period for people on benefits taking out emergency budgeting loans from the government, increased from 12 to 24 months, while the £90 fee to obtain a debt relief order has been scrapped.

The Government fund for people struggling with cost of living pressures is to continue for another six months.

Fuel duty has been frozen again, with the 5p cut in fuel duty on petrol and diesel has been kept for another year.

A ‘windfall tax’ on energy companies has been extended until 2029.

Alcohol duty has been frozen until February 2025, but a new tax on vaping products was announced, to start in October 2026 following a consultation. At the same time there would be a one-off tax increase on tobacco products.

As expected, Mr Hunt announced ‘tax breaks’ for second home owners would be scrapped, which currently make it more profitable for second home owners to let out their properties to holiday makers rather than to long-term tenants. This is predicted to would in another £300million a year to the government.

The threshold at which small businesses must register to pay VAT will be raised from £85,000 to £90,000 from this April.

The NHS is to receive an additional £2.5bn to “allow the NHS to continue its focus on reducing waiting times.”

Mr Hunt also announced a £3.4bn investment in the NHS to modernise its IT systems, including introducing a range of measures to employ AI and update computer systems to improve productivity and fund improvements to help doctors read MRI and CT scans more accurately and quickly.

The government will also create a ‘British’ ISA in the form of an extra £5,000 tax-free allowance for the public to invest exclusively in UK assets, in addition to the existing ISA tax allowance.