Spring budget 2024: Chancellor encourages more people into work | Consensus HR – Herts, Beds
A plan to make work pay, Chancellor Jeremy Hunt said as he recommended his latest Budget statement to the House of Commons. He announced very little that had not already been trailed in advance but provided more details of the measures that had been widely discussed in this week’s newspapers and news programmes.
Childcare
The chancellor announced a guarantee on the rates that will be paid to childcare providers to deliver the Government’s offer for children over nine months old for the next two years.
Energy
With the increase in energy prices caused by the conflict in Ukraine expected to last longer, as will therefore the sector’s windfall profits, the chancellor confirmed that he will extend the UK’s windfall tax on the profits of oil and gas companies for another year until March 2029.
Great British Nuclear will begin the next phase of the Small Modular Reactor selection process, Mr Hunt said, with companies now having until June to submit their initial tender responses.
Household Support Fund
Funding aimed at supporting vulnerable households with the costs of basic goods and heating their homes through the cost-of-living crisis, will be extended for a further six months.
Investment
The Government will create a British ISA in the form of an extra £5000 tax-free allowance for the public to invest exclusively in UK businesses with all the tax advantages of other ISAs. “This will be on top of the existing ISA allowances and ensure that British savers can benefit from the growth of the most promising UK businesses,” Mr Hunt explained.
He also plans to force local authorities and defined contribution (DC) pension funds to disclose how much they have invested in UK shares.
Levelling up
AstraZeneca will invest £650 million in the UK and Mr Hunt also announced an additional £650 million investment in the Cambridge Biomedical Campus and a new vaccine manufacturing hub in Liverpool.
Having already allocated £188 million for projects in Sheffield, Blackpool and Liverpool, the chancellor announced that £242 million would be allocated to Barking Riverside and Canary Wharf. This investment will, he said, see nearly 8000 houses being built and it will also transform Canary Wharf into a hub for life sciences companies.
Referring to a “Northeast trailblazer devolution deal”, Mr Hunt said this will provide a package of support for the region potentially worth over £100 million. The West Midlands Combined Authority will be awarded a further £15 million for cultural, heritage and investment projects.
NHS
Promising to double the amount the NHS is investing in IT and AI, the chancellor said there must be more digital input and less time-wasting forms. And, pointing out that police officers currently waste eight hours a week on unnecessary admin, he suggested that this approach could be mirrored in education, the police, courts, and local government with, e.g. more investment in non-court resolutions in the justice system.
The Government will, Mr Hunt said, fund in full the £3.4 billion cost of the NHS “productivity plan” he was introducing this week.
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.
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Our HR Comment: Spring budget 2024: Chancellor encourages more people into work | Consensus HR – Herts, Beds
Matthew Chilcott, FCIPD, ACEL, Comments: “Well, everyone will have their opinion on the recent Spring budget 2024 and how it affects you personally but from our point of view it is good to see the section in relation to childcare and the guarantee as this should hopefully help some parents back into work.”
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