Tax

National Insurance (NI): Double taxation of work (through NI and income tax) is unfair, the chancellor argued. It should be simpler and fairer so, from April 2024, there will be another 2p cut in NI taking it down to 8% and that, Mr Hunt argued, should see total hours worked increase by the equivalent of around 200,000 full-time workers. It will, he said, be worth around £450 a year for someone on an average salary.

VAT: 

Having been frozen for seven years, the threshold for VAT registration will go up from £85,000 to £90,000.

Vaping: A vaping tax will be introduced from October 2024, accompanied by an increased tobacco tax to maintain the disincentive to smoking. The freeze on alcohol duty will be extended to February 2025 to protect local pubs.

Child benefit: Turning to child benefit, the chancellor agreed that the current system, whereby it is withdrawn once a parent goes over £50,000, was unfair because it meant that a single parent earning £51,000 would lose the benefit while a couple both earning £49,000 would not. He plans to consult on moving to a household-based system in April 2026 but more immediately, from April 2024, will increase the lower limit to £60,000 and the top of the taper at which it is withdrawn will go up to £80,000.

Non-doms: 

With regard to the much-discussed question of taxing non-doms, Mr Hunt confirmed that he was planning to abolish the current system while ensuring that the UK remained competitive in line with other major economies. From April next year, new arrivals in the UK will not be required to pay any tax on foreign income for four years but, if they still live in the UK after that point, they will pay the same tax as other UK residents.

Air transport: Air passenger duty will be increased but only for business travellers, not economy flights.

Holiday lets: 

Tax breaks which make it more profitable for second homeowners to let out their properties to holiday makers rather than to long-term tenants to rent will be abolished as will stamp duty relief for people buying more than one dwelling.

Property: 

The 28% rate of property capital gains tax will be cut to 24% with the chancellor arguing that the lower tax rate will result in more transactions, leading to more tax revenue.

Full expensing: 

Referring back to his announcement last year of full expensing, which he described as a £10 billion tax cut for businesses, Mr Hunt announced his intention to publish draft legislation for full expensing to apply to leased assets.

Performing arts:

Tax reliefs for the performing arts introduced during the Covid-19 pandemic are to be made permanent.

Fuel duty: 

Finally, he said that the 5p cut in fuel duty due to end this month will be extended for a further year, meaning that it will stay at 53p per litre.

The chancellor’s speech gives highlights of the Budget with full details available in the 98-page “Red Book” and associated documents which can all be found on the GOV.UK website.

HRInform