On 6th March 2024, Chancellor of the Exchequer, Jeremy Hunt, delivered the Government’s Spring Budget. This ‘Budget for Long Term Growth’ aims to deliver lower taxes, improve public services and achieve more investment.
We have summarised the main points outlined in the Spring Budget:
Economic growth
- The Chancellor says the economy is expected to grow by 0.8% this year and 1.9% in 2025. That is slightly stronger than the 0.7% and 1.4% growth rate expected by the Office for Budget Responsibility at the time of the Autumn Statement in November 2023.
- Inflation is expected to fall below the government’s 2% target in “just a few months’ time”, Hunt says, down from 4% in January.
- The Bank of England’s long-term target is to keep inflation at a “low and stable” 2%.
Business taxes and investment
- The Public Sector Productivity Plan was announced today with a £4.2 billion investment, which will improve public service delivery.
- The NHS will receive an additional £3.4 billion as part of this to invest in new tech and digital transformation.
- £800 million will be invested to boost productivity across other public services.
- SMEs will be supported to invest and grow through a £200 million extension of the Growth Guarantee Fund, helping 11,000 small businesses to access the finance they need.
- An increase in the VAT registration threshold from £85,000 to £90,000 which will take around 28,000 small businesses out of paying VAT altogether.
- In the creative industries, the Chancellor said he will give film studios in England 40% relief on their gross business rates until 2034. He also unveiled plans for a new tax credit for independent films with budgets of less than £15 million.
- Significant package of support to establish the UK as a world leader in fast-growing industries over the next five years, including £270 million in automotive and aerospace R&D projects , and a £120 million top up for the Green Industries Growth Accelerator to help build supply chains for offshore wind and carbon capture and storage.
- Draft legislation will be published within weeks to extend full expensing, a £10 billion tax cut for businesses every year to help them invest for less, including leased assets when affordable to do so.
- Pubs, breweries, and distilleries will benefit from a further freeze to alcohol duty until February 2025.
- For the self-employed, a further 2p cut to Class 4 NICs from 8% to 6%.
Personal taxes and wages
- Building on the 2% cut to Employee National Insurance from the Autumn Statement, the Chancellor announced a second 2p cut from 10% to 8% from April 2024.
- From April 2024, the Chancellor said the level of income at which a parent starts to lose child benefit entitlements will rise from £50,000 to £60,000.
- The Chancellor announced a new “British Isa”, giving investors a £5,000 extra tax-free allowance to “encourage more people to invest in UK assets”.
General
- The Chancellor has said he will maintain a 5p temporary cut and freeze fuel duty for a further 12 months.
- Air passenger duty charged on non-economy airfares, or business class tickets, will be increased to account for inflation. The rate for economy travellers will remain frozen.
Click here to find out more about the Spring Budget, including the full speech.