In the last Spring Budget before a General Election, Jeremy Hunt gave the British public few surprises. But a cut to national insurance, and a chance to invest more money tax-free in UK companies, could be a boost.
What did Jeremy Hunt announce at this year’s Budget? Here are some of the key points.
National Insurance cut to save average Brit £450 a year
A 2p cut to National Insurance was the headline measure in the Budget, and Hunt saved it for last.
He’s taken the main rate down to 8% from 10%, saving the average UK worker around £450 a year.
The move is expected to boost the labour supply in the economy, by making it pay to work more hours.
He made the same move in his last set-piece fiscal overhaul, when the Autumn Statement also included a headline-grabbing 2p NI cut.
It will apply from April 6
More cuts could be on the way, if the Tories win re-election.
Hunt said the “double taxation” of pay - the combination of income tax and National Insurance - was unfair, and that, in the long-term, the Government would aim to bring it down further.
Hunt said: “When it is responsible, when it is able to be done without increasing borrowing, we will continue to cut National Insurance so we can truly make work pay.”
He said OBR figures find that the cut to National Insurance equate to 200,000 more people joining the workforce.
The Government hopes the giveaway, estimated to cost about £10 billion, will be a vote-winner at the election, but the Autumn Statement cut did little to boost Tory electoral hopes.
‘British ISA’ to encourage investment in UK
The City had been calling for reforms that would encourage investors to put their money in UK stocks, and companies to keep trading those shares in London.
Today, Jeremy Hunt delivered that with a British ISA, which will have an additional £5,000 tax free investment allowance on top of present allowances. There will be relief for investors that the ‘British ISA’ proposal does not appear to take the form of a tax increase on non-UK investments.
Matt McKenna at personal finance site finder.com said: “The big question about the British ISA was whether it would eat into the existing £20,000 annual allowance or be added as an extra on top. The fact that the Chancellor has given an additional £5,000 to accommodate this is a sensible move and I respect the ambition of a British ISA.
“In my opinion, it is reasonable for the British government to try and stimulate growth in its domestic market and this ensures UK investors won’t have to curb their current foreign investment plans.”
It comes after a number of high-profile firms opted to leave the London Stock Exchange, or found themselves bought out by private equity firms looking for bargains. UK stocks’ returns in recent years have also been feeble compared to the US.
The reforms have largely been welcomed, but many in the City have said they could have gone further.
Read more on the ‘British ISA’ here
Child benefit and VAT thresholds increased
The Chancellor will up the thresholds for child benefit, to tackle what he called “unfairness” in the structure of the benefit.
The High-Income Child Benefit Charge threshold will be raised from £50,000 to £60,000, and the level at which the benefit is withdrawn will be raised to £80,000.
Hunt said: “That means no-one earning under £60,000 will pay the charge, taking 100,000 families out of paying.”
He says half a million families will save an average of £1,300 a year from the higher thresholds.
The threshold for compulsory VAT reporting will also be increased by £5,000 to £90,000, but tax experts said the change does little to address the “cliff edge” that means small businesses close to the threshold figure to grow.
Non-dom tax regime scrapped
The non-domicile tax system will be scrapped and replaced with a new system.
The non-dom regime applies to people who live in the UK and pay tax on UK earnings, while maintaining a home overseas.
As of April 2025, new arrivals won't be asked to pay tax on foreign income for four years. If they continue to reside here, they will "pay the same tax as other UK residents”, Hunt said.
The move is one that may cause consternation in London's prime property sector, who rely on overseas investment to sell the capital's most expensive homes.
Sean Cockburn, Director at Mazars said: "The Chancellor has stolen the show on non-dom tax reform. Scrapping the current non-dom tax regime and replacing a time limited residence based alternative is an ambitious plan that will raise money for the treasury's finances and contribute to that all important fiscal headroom, but the knock-on impact is unknown.
“With a less generous system, which sees overseas income assed in the UK after four years, we could see some wealthy individuals shun the UK as a home altogether, and take their money with them. It's a careful balancing act that must be struck. Making the UK an attractive place for the world's wealthy to reside, spend money, and do business while being taxed fairly."
Fuel and alcohol duties frozen again
A freeze in fuel duty has become something of an annual Budget tradition since the Tories came to power in 2010.
The duty was frozen again, for the 14th consecutive year.
Jeremy Hunt said: “If I did nothing, fuel duty would increase by 13% this month”
Economists have noted that the repeated freezing of fuel duty has made a mockery of OBR forecasts, which are forced to assume the duty will be increased.
Alcohol duty will also be frozen.
“I have decided to extend the alcohol duty freeze until February 2025.
“This benefits 38,000 pubs all across the UK – and on top of the £13,000 saving a typical pub will get from the 75% business rates discount I announced in the Autumn. We value our hospitality industry and we are backing the great British pub.”
The Chancellor said the changes effectively knock 0.2 percentage points off of inflation, compared to if the duties had been increased.
Government to up vape and tobacco taxes
Jeremy Hunt will bring in excise tax on vapes, “to discourage non-smokers to take-up vaping”.
But tobacco duty will be incresased at the same time, “to maintain a financial incentive” for smokers to turn to vapes instead.
The measure continues the Government’s fight against the rise of vaping, after a ban on disposable vapes was announced earlier this year.
Stamp duty relief abolished... for multiple homes
"I have also been looking at the stamp duty relief for people who purchase more than one dwelling in a single transaction, known as Multiple Dwellings Relief," said Hunt.
Intended to support investment in the private rented sector, Hunt said an external evaluation found "it was being regularly abused".
It's now been abolished, too.
Hunt also promises to transform Barking Riverside and Canary Wharf with £242 million of investment, alongside investments in Blackpool, Sheffield and Liverpool.
Read more on the changes for the housing and property sectors here
Budgeting Advance Loans repayment period extended
The Chancellor will increase the repayment period for Budgeting Advance Loans, which are offered to those on Universal Credit to help them pay emergency costs.
Hunt said nearly one million people rely on those loans.
He said: “To help make such loans affordable, I have today decided to increase the repayment period from 12 months to 24 months,” he said.
That change was welcomed by MoneySavingExpert.com’s Martin Lewis.
Energy windfall profits tax extended
The windfall tax on energy companies, brought in as energy prices soared in the wake of Russia’s invasion of Ukraine, will be extended to 2029.
The Chancellor says this will raise £1.5 billion
He says that high energy prices after Russia’s invasion of Ukraine are lasting longer, extending high profits in the industry.
As a result, he is keeping the windfall tax on the sector in palce until 2029, raising £1.5 billion.
There will also be legislation to abolish it if “market prices fall to the historic norm for a sustained period”
Shares in the sector shrugged off the news. BP stayed over 6p higher on the day at 477.3p. Shell is up 31p at 2483p
Latest figures on UK growth and inflation
The Chancellor also revealed the latest figures from the OBR on the UK’s economic outlook.
The OBR expects the economy to grow by 0.8% this year and 1.9% next year – 0.5% higher than their Autumn Forecast. After that growth rises to 2%, 1.8%, and 1.7% in 2028.
Latest forecasts from the Office for Budget Responsibility show inflation “falling below the 2% target in just a few months’ time – nearly a whole year earlier than forecast in the Autumn Statement.”
Hunt said: “He said: “Growth has been larger than every large European economy, unemployment has halved and there are 800 more jobs for every single day we have been in office.”
Inflation was 11% when he and Rishi Sunak took office.
