Chancellor Jeremy Hunt has signed off and delivered the UK Budget 2024. Here are the key Spring Budget takeaways and the lowdown on what they could mean for you.
What was announced in the Budget 2024?
1. Another National Insurance cut
As had been widely rumoured, the Chancellor is cutting National Insurance by another 2p, so that the main rate of National Insurance for UK workers will fall from 10% to 8% from 6 April 2024. The main rate for self-employed class 4 contributions, which was already due to drop from 9% to 8% in April, will now decrease to 6%.
The move could save a worker who earns £30,000 around £349 a year, according to the investment platform, interactive investor. Those earning £50,000 could save £749, while higher rate taxpayers would be £754 better off.
The 2p reduction mirrors the National Insurance changes announced in last year’s Autumn Statement, which saw the main rate fall from 12% to 10% on 6 January. Self-employed Class 2 National Insurance contributions will be scrapped altogether in April.
2. Child benefit reform
The long held notion of ‘unfairness’ in the child benefit system, particularly for single-income families, is finally being addressed.
Currently, if a parent earns more than £50,000, they have to pay some child benefit money back through a high income charge. If they start earning £60,000, all the child benefit money must be returned. This means that a single parent earning £50,000 would lose out on support, while two parents both earning £49,000 would be eligible for the full amount.
In the Budget, the Chancellor announced a consultation will take place to try and address the issue. The overall aim is to switch to a system of assessment by household income rather than individual earnings by April 2026. But crucially, in the meantime, and with effect from April, the minimum threshold when child benefit begins to be lost will rise to £60,000. And the upper threshold, beyond which the benefit is withdrawn altogether, will rise to £80,000.
“The child benefit rules that penalised single parents were always incredibly unfair,” said Sarah Coles, head of personal finance at investment platform, Hargreaves Lansdown. “It’s hard enough managing a household on a single income, without the system being stacked against you, so the decision to move to a household basis is a welcome change.”
3. ‘British ISA’ bolted onto current regime
During his Budget speech, the Chancellor outlined his vision for a British ISA, offering an additional £5,000 tax-free allowance to investors willing to back UK investments. This amount would be on top of the current £20,000 annual ISA limit. However, no date has been set for its introduction, with a consultation on the details being required first.
For those with sufficient spare funds, the additional tax shelter could prove useful. But on the other hand, not many people maximise their £20,000 allowance in the first place. According to HMRC, only 15% of ISA subscribers saved at the maximum in 2020-21.
“For most people, the British ISA only adds an unwelcome complexity,” said Michael Summersgill, chief executive at investment platform, AJ Bell. “People will now have another option to evaluate when deciding which ISA type is right for them.”
On a similar theme, it was revealed that National Savings & Investments (NS&I) will introduce a British Savings Bond in April. The bond will offer savers a guaranteed rate fixed for three years. NS&I products prove popular with savers due to the organisation being backed by HM Treasury, and offering 100% security for savers’ money.
4. Fuel duty cut extended
Since March 2022, motorists have enjoyed a 5p reduction in fuel duty, but this was only introduced as temporary support. This reduction was due to end on 23 March 2024, but in the Budget this is now being extended.
The Chancellor also confirmed that the freeze on fuel duty will be extended for another 12 months, meaning that it won’t rise with inflation. The government estimates this will save typical car users £50 in the coming tax year.
5. Debt help concessions
To help those struggling financially, the Chancellor announced the repayment period on budgeting advance loans will increase from 12 months to 24 months. Budgeting advances are emergency interest-free loans from the Department for Work and Pensions to Universal Credit claimants who face unexpected expenses.
It was also confirmed that the £90 charge for writing off debt using a debt relief order will be abolished from April. In addition, the maximum debt allowed under an order will rise from £30,000 to £50,000 from 28 June.
6. Property taxation
There was little in the way of announcements for homebuyers, both current and new, but it was confirmed that tax relief on furnished holiday lets will be scrapped from April 2025. This will come as a blow to those with holiday let mortgages, who can currently deduct expenses such as mortgage interest payments from rental income to lower their tax liability.
Separately, it was announced that the higher rate of capital gains tax (CGT) for selling residential property will reduce from 28% to 24% with effect from April.
Spring Budget 2024 rumours that came to nothing
There are always plenty of predictions in the run-up to any Budget or fiscal statement. Here are the Budget 2024 rumours that didn’t make the Chancellor’s final cut.
1. Income tax changes
When the National Insurance changes were announced in last year’s Autumn Budget, there was some speculation that income tax could be next in line for a reduction. However, the rates and thresholds didn’t garner a mention this time around either.
2. First-time buyer 99% mortgages
Rumours of a scheme that would allow first-time buyers to snap up a property with just a 1% deposit have come to nothing. The idea was that the government would give lenders financial guarantees in return for offering mortgages to cover 99% of a property’s value. However, this has proven a non-starter following rumoured pushback from the banks.
3. Lifetime ISA left unchanged
Hopes that changes to the Lifetime ISA (LISA) would be forthcoming have also gone unheeded. Allowances which have remained the same since the programme launched in April 2017 are limiting the options of buyers, but for now nothing is set to change.
» MORE: What the Spring Budget means if you’re a small business owner
Image source: Getty Images
Dive even deeper
Advent Calendars: Are you Already too Late for This Year’s Must-haves?
by Sarah Brooks
5 Points You May Have Missed in the Autumn Budget – and What it Means for Your Money
