The Chancellor delivered the Spring 2024 Budget yesterday and announced a series of measures designed to support the stated Government policy plans of reducing public debt and growing the economy. In this blog, we're going to explain the latest financial news from the Chancellor's office.
The economic backdrop indicates promising growth, with GDP forecasted to increase by 0.8% this year and 1.9% the next, surpassing previous estimates than the autumn forecast by 0.5%. This upward growth trend is forecast to extend until 2027, as per the Office for Budget Responsibility (OBR). Additionally, inflation stands at 4%, but is expected to decrease to the Bank of England's target of 2% in the “coming months”.
Specific measures were announced to support business investment, help motivate workers back into work and ensure that productivity increased in public services via technology.
" The main rate of national insurance contributions paid by workers will be reduced from 10% to 8% starting from April 6, 2024. Hunt says this further 2 percent reduction will be worth £450 a year for someone on an average salary. This cut is aimed at benefiting 27 million people in the UK."
Employment
The Chancellor reported that with 900,000 vacancies and a large inactive base in the workforce he wanted to bring in measures to reward work and benefit workers:
- The main rate of national insurance contributions paid by workers will be reduced from 10% to 8% starting from April 6, 2024. Hunt says this further 2 per cent reduction will be worth £450 a year for someone on an average salary. This cut is aimed at benefiting 27 million people in the UK.
- The class 4 self-employed NICs rate will be reduced from 9% to 6% on the same date. Meaning an average tax cut per person of £650 per person.
- Child benefit salary threshold increase from £50,000 to £60,000 and the top of the taper at which it is withdrawn will go up to £80,000. Representing a saving of £1,260 for around half a million working families
Taxes
Here's a breakdown of the latest tax changes announced by the Chancellor:
- Windfall tax on oil and gas extended
- Tax on vapes, increase in tobacco duty
- Fuel and alcohol duty freeze extended
- Tax relief for holidays lets scrapped
- Non-dom’ tax status abolished to increase tax revenues
- Stamp duty relief for people buying more than one property is being abolished.
- The higher rate of property capital gains tax is to be reduced from 28% to 24%, this tax is charged on sales of non-primary residences; the higher property transactions expected as a result are expected to bring in more tax overall
Legislation Update
Specific reference from HMRC around ‘tackling non-compliance in the Umbrella Market’ was raised in the Spring Budget. It was stated the commitment to protect workers employed by Umbrella companies, ensures fair, genuine competition in the market, which is currently leading to significant Exchequer losses caused by tax non-compliance. HMRC has set a date for Tax Administration and Maintenance Day (TAMD) on April 18th, 2024, to address these issues. Also, the government plans to release new guidance in the summer of 2024 to help workers and businesses using umbrella companies.
For further support on this topic or want to chat with Giant about potential solutions, reducing supply chain risk while increasing compliance please get in touch at: businessdevelopment@giantgroup.com
Public services
Public services spending will keep increasing by 1% each year. In 2024/25, the NHS will get an extra £2.5 billion. There's also £3.4 billion set aside to invest in NHS technology like IT and AI, as part of the "Public Sector Productivity Plan." These investments show the government's commitment to making public services better and more efficient, especially in healthcare.
Business
The Chancellor discussed the business sector, where significant changes are underway. From VAT threshold increases to projections on business investments and targeted measures to support growth, here are the latest developments shaping the business landscape:
- An increase in the threshold for businesses paying VAT from £85,000 to £90,000
- Business investment this year is projected to be 10.6% of Britain's GDP
- Specific measures to support investment:
- New ISA £5,000 (additional to current £20,000) for investment in exclusively British businesses
- Draft legislation to be published for full expensing to of business leased assets.
To sum up, the Spring 2024 Budget introduces ways to make the economy stronger, support businesses, and improve public services. From tax adjustments to more money for healthcare, the government is working to handle economic challenges and encourage new ideas. As these plans happen, it's important for everyone to keep up to date and understand how these changes affect your business.
