Spring Budget 2024: what changes did Jeremy Hunt announce?
Chancellor Jeremy Hunt called his pre-election Spring Budget a long-term growth plan offering 'more jobs, more investment and lower taxes'.
During his statement in the House of Commons today (6 March), he unveiled a package of measures aimed at supporting British workers and businesses, including National Insurance cuts, easing the child benefit income theshold, and changes to a number of different taxes.
Here, we take a closer look at what was included in the speech, and how it will affect your finances.
National Insurance cut again
In the run-up to the Spring Budget, the Chancellor promised to 'show a path' towards a lower-tax economy. While many people will be disappointed his plan doesn’t include changes to income tax, Hunt did announce cuts to National Insurance Contributions (NICs).
Class 1 employee NIC
The main rate of Class 1 employee NICs will be cut from 10% to 8% for workers earning over £12,570, from 6 April 2024.
The change is expected to benefit 27 million people, saving the average worker £450 when combined with the two-percentage-point cut already announced in November's Autumn Statement and introduced from January.
Self-employed NIC cuts
If you're self-employed, then you'll benefit from a fall in Class 4 contributions from 8% to 6% on profits over £12,570.
The rate cut will also be introduced from 6 April 2024. Together with the one-percentage-point cut that was due to come in from April, the measure will mean a saving of £650 for two million self-employed workers.
- Find out more: use our updated National Insurance calculator to find out what the change means for your money
Increase of child benefit threshold
The Chancellor also announced reforms to child benefit.
Currently, parents claiming child benefit must pay some of it back once either of them earns more than £50,000. If either parent earns over £60,000 it must be paid back in its entirety.
From April, the income threshold will rise from £50,000 to £60,000, and the point at which the benefit must be paid back in full will rise from £60,000 to £80,000.
The Chancellor says almost half a million families will get a benefit boost, on average, of nearly £1,300.
Hunt also announced a consultation to move the high-income child benefit charge to a household-based system to be introduced by April 2026. It is currently unclear whether this would involve another increase to the threshold.
- Find out more: child benefit income cap to be eased from April
New 'British' Isa and savings bond
Hunt announced he is reforming the Isa system to encourage more people to invest in British products. Two big changes were unveiled:
- British Isa: This would effectively be a stocks and shares Isa for UK-listed companies only, with savers who utilise the product rewarded with an additional £5,000 allowance on the top of the existing £20,000 tax-free limit on Isas.
- New NS&I bond: The British Savings Bond from NS&I will offer a guaranteed savings rate over three years. Although there are currently no details on what returns customers can expect.
Find out more: New British Isa and savings account explained
Property tax reforms
The Chancellor announced a few changes that will affect property investors:
Clampdown on holiday lets
The tax system for holiday lettings is not working, Hunt said, so he will abolish the current system of furnished holiday lettings relief.
Under current rules, second home owners that let out their properties to holidaymakers can benefit from a raft of tax benefits. For example, landlords can claim capital allowances on any items designed to improve the facility – such as furniture and white goods.
Profits from furnished holiday lettings are also classed as relevant earnings for pension purposes. This means that they’re eligible for pension contributions (including employer’s contributions), depending on how much you earn from the letting.
Hunt says these are rules are being regularly abused and make it more profitable for second home owners to let out their properties to holiday makers rather than rent to long-term tenants.
The Chancellor also announced that stamp duty relief for people buying more than one dwelling will be abolished.
Property capital gains tax
The higher rate of property capital gains tax is to be reduced from 28% to 24%, Hunt announced. He says the move is predicted to increase revenues as there will be more transactions.
Tax on tobacco and vaping
Hunt announced another round of tax increases aimed at smokers.
As well as a one-off increase to tobacco duty, Hunt will also introduce a tax on vaping products to start in October 2026, following a consultation.
In November's Autumn Statement, the Chancellor increased rates on hand-rolling tobacco products by Retail Price Index (RPI) inflation plus 12%. Other tobacco products also rose by RPI plus 2%.
Rishi Sunak began a major clampdown on smoking last year, when he announced a ban on the sale of tobacco products to anyone born after 1 January 2009.
Booze tax freeze
There was good news for drinkers. The freeze on alcohol duties, which was due to end in August 2024, will be extended until February 2025.
The Chancellor says this will benefit 38,000 pubs.
- Find out more: Chancellor to increase tax on vapes and tobacco products
Fuel duty to remain frozen
Rates on fuel duty – a tax included in the price you pay for petrol, diesel and other fuels – will be kept the same for another year.
Mr Hunt also stated that the current additional 5p cut in fuel duty, which was introduced in 2022, will also continue. It is estimated the move will save motorists around £50 a year on their fuel bills.
Fuel duty was first cut by 5p per litre in 2022's Spring Budget. No government has raised the levy since 2011.
Today, the average price of a litre of unleaded was 144.99p, while a litre of diesel currently costs 153.39p, based on research by the RAC Foundation.
Tax on flights
The government will increase Air Passenger Duty (APD) for travellers who fly non-economy class.
APD is a tax paid by customers when they book a flight and is calculated based on the distance travelled. Business class passengers are currently charged £13 in duty for domestic flights, £26 for flights up to 2,000 miles, £191 for up to 5,500 miles and £200 for further than that.
Pension fund reforms
Pension funds will need to disclose how much of savers’ money is invested in British businesses.
The government reforms, which apply to a type of workplace pension called defined contribution schemes, will also force funds to publicly share performance data and compare it against competitors.
Those found to be underperforming will not be allowed to take on new business from employers. The Pensions Regulator and the Financial Conduct Authority will also have new powers to intervene.
The plans, intended to help savers compare schemes and make more informed choices, are subject to a consultation by the FCA and will need parliamentary approval before they become law.
Help with debt
The Chancellor has announced a raft of new measures that will assist those currently struggling with debt.
The £90 administration fee for debt relief orders (DRO) – a personal insolvency debt solution for individuals who can't pay their debts – will be abolished from 6 April 2024.
It is also increasing the scope of DROs. It is raising the maximum debt value threshold from £30,000 to £50,000 and increasing the maximum value of motor vehicle that an individual can retain, from £2,000 to £4,000.
Hunt also confirmed that he is doubling the repayment period for budgeting advance loans from 12 months to 24 months. These loans – of between £100 and £812 depending on circumstances – help those already receiving benefits to cover one-off emergency purchases, eg if you're starting a new job or moving home.
This will apply to budgeting advance loans taken from December 2024 onwards.
The government is also providing an additional £500m to expand the Household Support Fund in England from April to September 2024. This provides targeted support to vulnerable households with the cost of essentials such as food and utilities.
- Find out more: help for those in debt announced in the Spring Budget
