Spring Budget 2024 – Key Points from the Chancellor’s speech

Published: 06/03/2024 By Mackenzie Street

Earlier today Chancellor Jeremy Hunt gave his Budget speech in the House of Commons, we summarise the main points below:

State of the UK economy

In 2023, the Prime Minister set out five priorities which will provide the foundation for his plan to build a better UK. With his proclaimed victory in slaying the inflation dragon, the Prime Minister and his Chancellor turn to their next priority of growing the economy.
The Chancellor addressed the nation today, highlighting the UK economy’s resilience in the aftermath of the COVID-19 pandemic, an energy price spike driven by the war in Ukraine, and globally high inflation. The Office for Budget Responsibility (OBR) announced that it expects UK gross domestic product (GDP) to rise by 0.8% in 2024, a welcome increase from the 0.7% forecast just six months ago.

Great British ISA

The Chancellor has proposed a new British ISA which will allow an additional £5,000 ISA allowance for investment in UK equities. This extra allowance will sit alongside the current £20,000 that can be invested across other ISA wrappers currently available.
The British ISA will continue to benefit from income tax free and capital gains tax free growth, just like the current ISAs, as well as supporting promising UK business with the capital to expand.

Another cut to NICs

The government cut national insurance contributions (NICs) for 29 million workers at the Autumn Statement 2023 and today’s Spring Budget 2024 sees a further cut worth £10 billion a year for workers across the UK.
The main rate of employee National Insurance will be slashed by 2%, from 10% to 8% from 6 April 2024. Combined with the 2% cut at the Autumn Statement 2023, this will save the average worker over £900 per year.
The main rate of self-employed National Insurance will also be slashed by 2%. This is on top of the 1% cut announced at the Autumn Statement 2023. This means that from 6 April 2024, the main rate of Class 4 NICs for the self-employed will be reduced from 9% to 6%. Combined with the abolition of the requirement to pay Class 2 NICs, the saving for the average self-employed worker is £650 per year.

Good news for parents

Under the current regime, two parents each earning £49,000 per year will receive Child Benefit in full, while a household earning less overall but with one parent earning over £50,000 will see some or all of their Child Benefit withdrawn. The government have recognised this unfairness and aims to move to a system based on household, rather than individual, income by April 2026.
In the meantime, to support those in work, from April 2024 the threshold for the High Income Child Benefit Charge will be raised £10,000 to £60,000. This takes 170,000 families out of paying the tax.
Furthermore, the rate of the High Income Child benefit Charge will be halved so that Child Benefit is not repaid in full until you earn £80,000. Estimates suggest that 500,000 families will gain an average of £1,260 in the 2024/25 tax year as a result.

Furnished holiday lettings

The generous furnished holiday lettings (FHL) tax regime for landlords will be abolished from April 2025 in a bid to increase the supply of properties available for long-term rent.
Currently, landlords who rent out short-term furnished holiday properties can deduct the full cost of their mortgage interest payments from the rental income they receive. This reduces their tax bill and allows them to pay lower rates of capital gains tax when they sell.

Capital gains tax

The Chancellor will be reducing the rate of capital gains tax (CGT) on residential property.
Under the current regime, individuals with an annual income exceeding £50,270 may pay CGT at a rate of 28% on the sale of second homes and buy-to-let properties. From 6 April 2024, this will be cut by 4% down to 24%.
The sale of your main residence continues to be exempt from capital gains tax.

Pension allowances

Previously, the lifetime allowance set the maximum size you can allow your pension pot to grow before a tax charge became payable. This limit was set at £1,073,100 but will be scrapped from 6 April 2024.
The existing £60,000 annual allowance which was introduced in 2023/24 tax year will continue for 2024/25 tax year. Similarly, the £10,000 money purchase annual allowance will continue in 2024/25 tax year.