On Wednesday, 6th March 2024, Chancellor of the Exchequer Jeremy Hunt delivered his spring statement to parliament. The measures announced aim to “give much-needed hope in challenging times” and provide “more opportunity, more prosperity and more funding for (our) precious public services.”
Economic Forecast
Detailed in the Spring Statement, the latest economic outlook from the Office for Budget Responsibility (OBR) revealed a relatively uneventful recent economic period compared to the past few years. Specifically, inflation has fallen to 4% and is expected to fall below the government’s ideal 2% target by the second half of this year. The OBR predicts the economy will grow by 0.8% this year and 1.9% in 2025.
However, this forecast should be considered with caution. For instance, the current escalation in the Middle East could see inflation increase to 7%, the OBR warned.
Measures for Individuals
The announced Spring Statement measures that impact individuals include the following:
- National insurance contributions will be cut from 10% to 8% starting 6th April 2024. Combined with the 2% cut in the Autumn Statement, this reduction will save the average employee £900 annually.
- The non-domicile tax regime—where foreign nationals living in the UK but domiciled overseas avoid paying UK tax on overseas income—will be abolished following a transitionary period.
- The Child Benefit threshold for full payment will increase from £50,000 to £60,000 from April, and part payments may be made until an individual earns £80,000.
- The government’s Household Support Fund will continue for a further six months to help those struggling with cost-of-living pressures.
- The government will introduce a new British Individual Savings Account (ISA), following a consultation, allowing an additional £5,000 of annual tax-free investment for savers.
Measures for Businesses
Here are the measures announced in the Spring Statement that impact businesses:
- The threshold at which small businesses have to register to pay value added tax will rise to £90,000 from 1st April 2024.
- The COVID-19 government loan scheme for small businesses will be extended until March 2026.
- Alcohol duty will be frozen until February 2025, benefitting 38,000 pubs.
- Fuel duty will be frozen, meaning the 5p cut in fuel duty on petrol and diesel will continue for another year.
A new tax on vaping products will be introduced following a consultation. However, there will be a one-off increase in tobacco duty to maintain the financial incentive to favour vaping.
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