What's in the Spring Budget 2024?

Against the backdrop of changing economic conditions and a forthcoming General Election, Chancellor Jeremy Hunt announced a series of measures in the 2024 Spring Budget. Here’s a rundown of some of the key announcements.

 

INFLATION DOWN, GROWTH SLIGHTLY UP

The Office for Budget Responsibility (OBR) has forecast that UK GDP will grow by 0.8% this year and 1.9% next year.

Inflation has receded, and markets are expecting a decline in interest rates accordingly.

However, output has stagnated, and there are reports that higher and rising levels of inactivity offset the impact and size of the UK workforce.

 

PENSIONS, SAVINGS & INVESTMENTS

Individuals will soon be able to access a new Great British ISA (GB ISA), that Hunt explains would “encourage more people to invest in UK assets”. This will give people an additional £5,000 to save alongside the existing £20,000 ISA allowance, but some in the industry are concerned this may add another layer of complexity to ISAs for consumers.

A British Savings Bond will be made available through National Savings and Investments (NSI), to help people “save for the long-term”, according to the Chancellor. It offers a guaranteed rate, fixed for three years, but the actual rate itself has yet to be announced.

The Chancellor once again mentioned that the ‘pension pot for life model’ is still being explored. This was first mentioned in the Autumn Statement in November 2023, and – at the time – we at Beacon wondered if the practicalities of such a scheme would be viable for consumers.

A major theme in the Chancellor’s statement was ensuring adequate investment in UK assets and businesses. To this end, new powers will be given to the Pensions Regulator and Financial Conduct Authority to judge performance on their returns, not just costs. Defined Contribution (DC) and local government pension funds will need to publicly disclose their level of UK and international equity investments.

The Government’s remaining shares in Natwest will be sold later this year, subject to market conditions.

 

TAXATION

National Insurance has been cut for the second Budget in a row, by 2p for workers – from 10% to 8%, following the previous cut in last year’s Autumn Statement,

Stamp Duty multiple dwelling relief has been abolished. This applies to people who are buying more than one dwelling, including those owning holiday lets.

Higher-rate Capital Gains Tax (CGT) on property will be reduced from 28% to 24%. The Chancellor remarked this would bring in more money, as more transactions would be covered. The lower rate of CGT remains in place.

For parents receiving Child Tax Credit, if either parent begins paying over £50,000, they have to start paying back 1% on each £100 they earn over £50,000. From April 2024, this threshold will increase to £60,000. The amount at which the tax credit is withdrawn entirely has been increased from £60,000 to £80,000. A reformed household model is set to be introduced in 2026.

The non-dom tax break for foreign residents within the UK will be abolished, to be replaced by a new scheme. New arrivals will not pay tax on foreign income and gains in their first four years within the UK.

Fuel duty will stay frozen for a further 12 months.

Alcohol duty will remain frozen until February 2025.

 

BUSINESSES

The VAT threshold for small businesses was increased from £85,000 to £90,000.

Full Expensing will soon apply to leased assets, as well as owned, as part of draft legislation the Chancellor announced. Last Autumn, the tax break had been applied to businesses investing in ‘plant and machinery’. This is something we at Beacon hoped would be included, in our pre-Budget article.

Small Businesses will continue to receive support from the post-pandemic Recovery Loan Scheme, which will receive a further £200mn.

 

FURTHER INTEREST IN CAMBRIDGE

For clients based near our base in Huntingdonshire, you may be interested to learn that a further £10mn will support transport and health infrastructure in Cambridge. The city continues to receive interest from the Government, which wants to see it as the world’s leading scientific powerhouse.

This summary was written on 6th March 2024. We will continue to monitor developments, but if you have any questions or concerns about your situation following the announcements, you can reach us on 01480 869 466 or email info@beaconwealth.co.uk.  

 

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