UK Spring Budget 2024

With the Spring Budget 2024 annoucned earlier, new measures and policies have been revealed, along with their implementation timelines. So, what should you expect and how can you prepare yourself for the new budget? Let’s take a closer look at the summary of HM Treasury’s Spring Budget announcement.

Economic Context

• Recovery Indicators: The UK economy is showing signs of recovery with low unemployment and real wage growth.
• Inflation: Expected to fall to 2% by April, though services inflation remains high.

Key Budget Announcements

• National Insurance Cut: Aimed at increasing disposable income and boosting consumer spending.
  Reduction in the main rate for employees. At the moment of the writing the national insurance contribution is rated at 8%, reducing employee burden of national insurance contribution.
  
• High Income Child Benefit Charge: Adjustments to thresholds to reduce the number of people needing to fill out self-assessment forms.
  
• Business Measures: Extension of the government loan scheme for small businesses.
  Adjustments to the VAT threshold to support small businesses.
  

Tax Reforms and Rate Changes

• Remittance Basis: Abolition of the remittance basis of taxation for non-UK domiciled individuals, with introduction of the Foreign Income and Gains (FIG) regime, exempting qualifying individuals from tax on their foreign income if it is eligible.
  
• Income Tax:No changes to the basic and higher rates.
  Additional rate threshold lowered from £150,000 to £125,000.
  
• Corporation Tax:Main rate remains at 25%.
  New small profits rate at 19% for companies with profits up to £50,000.
  
• Capital Gains Tax:Annual exempt amount reduced from £12,300 to £6,000 from April 2024, and to £3,000 from April 2025.
  
• Inheritance Tax:Nil-rate band frozen at £325,000 until April 2028.
  
• VAT:Registration threshold remains at £85,000 until April 2026.
  

Challenges and Criticisms

• Lack of a Big Theme: The budget lacked a standout, game-changing policy.
• Public Finances: Despite a record surplus in January, spending remains a critical issue.
• Long-term Growth: Concerns about the lack of measures to significantly boost long-term productivity and economic growth.

Political Implications

• Strategic Move: Seen as a strategic move after election, focusing on appealing to working families and addressing voter concerns. We shall expect more taxes and policies, changes for high income group and rich people.
• Effectiveness: Doubts about its effectiveness in significantly changing public sentiment.