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Spring Budget 2024

Budget

In the Spring Budget, inflation significantly drops, with positive forecasts for GDP growth in the coming years. The VAT threshold will increase, supporting businesses alongside the renamed Growth Guarantee Scheme. Personal finance sees notable changes with a revamped Child Benefit system and National Insurance cuts, aimed at aiding families and individuals financially. Additionally, new investment opportunities arise with a UK-focused ISA, alongside adjustments in tax allowances to encourage financial prudence and investment.

 

Key Highlights:

 

Economy:

  • Inflation has more than halved, falling from its peak of 11.1% to 4.0%. The OBR forecasts inflation to fall to its 2% target in Q2 2024, a year earlier than in their November 2023 forecast.
  • Growth has been stronger than expected at the start of 2023. GDP is forecast to grow in every year of the OBR’s forecast with it being 0.8% this year, 1.9% in 2025 and then 2% in 2026, 1.8% in 2027 and 1.7% in 2028.
  • Debt is forecast to fall as a proportion of GDP in the medium term.

Business:

  • From April 2024 the VAT registration threshold will increase from £85,000 to £90,000.
  • The Recovery Loan Scheme will be extended for two years, under the new name Growth Guarantee Scheme.
  • The Full Expensing Capital Allowance announced in the Autumn is to be made permanent with plans to extend it to lease assets.

Personal:

  • A significant reform to the Child Benefit regime was announced with plans to move to a household rather than an individual income-based system by April 2026. To help families now from April 2024, the High Income Child Benefit Charge threshold will increase from £50,000 to £60,000. The rate of the charge will also be halved meaning that the Child Benefit is not repaid in full until you earn £80,000.
  • Following on from the cut to National Insurance seen in the Autumn budget, from 6th April 2024 there will be a further cut of 2p from 10% to 8% to the main rate of National Insurance paid by employees.
  • The main rate of Self-employed national insurance will also be cut by 2p from 8% to 6% from 6th April 2024.
  • To support the housing market the higher rate Capital Gains Tax for residential properties will be reduced from to 28% to 24%, with the lower rate remaining at 18%.
  • The furnished holiday letting tax regime is being abolished from April 2025 to help make the system fairer between short-term and long-term lets.
  • The chancellor announced the introduction of a new UK ISA, with its own £5,000 tax-free allowance in addition to current ISA allowances available when invested into UK-focused assets.
  • The tax-free dividend allowance will be reduced down from £1,000 to £500 from April 2024.
  • The Capital Gains Annual Exemption will also reduce from £6,000 to £3,000 from April 2024.
  • The current tax system for those who are resident in the UK but not domiciled (Non-Dom) is being abolished. A new residence-based system will be introduced in April 2025.