The Spring Budget 2024: What you need to know
Today the Chancellor delivered his Spring Budget.
He set out measures to reward hardworking families with National Insurance tax cuts – leaving the average worker over £900 better off per year, when combined with changes delivered in January.
We’re growing the economy by encouraging investment into the UK, supporting working people and we’re helping families across the country with the cost of living.
The plan includes new investment into the NHS, and a plan to bring public sector productivity back to pre-pandemic levels.
Tax cuts for employees
We are reducing the amount of National Insurance working people in the UK must pay.
From April 6 this year, Employee National Insurance will be cut from 10% to 8% – meaning employees on an average salary will receive an extra £450 in their pay packet.
This comes on top of a 2% reduction in January this year. That means that combined with those changes, the average working person will be better off by over £900.
Tax cuts for the self-employed
We are also cutting taxes for two million of the self-employed, reducing the main rate of Class 4 NICs from 8% to 6%.
Combined with the tax cuts for the self-employed announced in the Autumn Statement, this means around £650 extra for an average self-employed person earning £28,000 a year.
Helping people with the cost of living
We are extending the Household Support Fund to help the most vulnerable households with the cost of living.
We’ll provide an additional £500 million (including Barnett impact) so the scheme can continue in England from April to September 2024.
This builds on support delivered at the Autumn Statement including an increase in the National Living Wage by 9.8% from 1 April 2024 and uprating the basic State Pension and new State Pension for 2024-25 by 8.5%.
What is the Household Support Fund?
You may be able to get help with essential costs from your local council in England through the Household Support Fund.
This could help if you’re struggling to afford things like energy and water bills, food or essential items.
Your council may also offer food vouchers to families during the school holidays.
Funding is aimed at anyone who’s vulnerable or cannot pay for essentials. You do not have to be getting benefits to get help from your local council.
Supporting the reform of the NHS
We are providing new investment for the NHS.
That includes £2.5 billion in funding to make progress on getting waiting lists down, and £3.4 billion to deliver 2% annual NHS productivity gains by 2028-29.
The new funding will boost everyday services, improve maternity care and increase NHS funding in real terms from 23-24 to 24-25.
Improving public sector productivity
And to make sure taxpayers’ money is spent as effectively as possible, we’ve also announced a new plan to return public sector productivity back to pre-pandemic levels – including our investment in the NHS.
Over three years, the £3.4 billion in NHS funding will be used to boost productivity with improved technology and more efficient ways of working.
That includes doubling investment in digital transformation, significantly reducing the 13 million hours lost by doctors and nurses every year because of old IT systems.
And we’ll deliver an extra 130,000 tests thanks to AI-fitted MRI and CT scanners that help doctors read results more quickly and accurately.
As well as investing in the NHS, we’re providing £800 million to boost productivity across other public services, including the police, which is expected to deliver an extra £1.8 billion in productivity benefits by 2029.
Helping working parents
It’s not right that single-earner homes are punished when it comes to claiming child benefit.
That’s why we’re making the process fairer by moving to a household-based system by 2026.
To help families immediately, we’ll raise the threshold from April 2024 for the High-Income Child Benefit Charge from £50,000 to £60,000, as well as halving the rate paid up to £80,000.
Thanks to this tax cut:
A family with 2 children, whose higher earner has an income of £55,000, will gain around £1,109.
A family with 2 children, whose higher earner has an income of £65,000, will gain around £1,664.
A family with 2 children, whose higher earner has an income of £75,000, will gain around £555.
Helping nurseries and preschools with the cost of living
Nurseries and preschools will be protected from rising costs.
For the next two years, we’ll guarantee that the hourly rate providers are paid to deliver the free hours offer for children aged 9 months to 4 years will increase in line with the metric used at Spring Budget 2023.
This will give nurseries and preschools the certainty they need to deliver the massive expansion of childcare provision announced last year.
Our plan will mean nursery and preschool staff get the wage increases they deserve, and give nurseries certainty to invest, expand and deliver the single biggest investment in childcare this country has ever seen.
Encouraging investment
We’ve announced new tax breaks and investment, to help establish the UK as a world-leader in high-growth industries.
The UK’s creative industries will be backed by over £1 billion, including higher tax reliefs to lower the cost of producing visual effects in high-end TV and film.
We’ll also introduce a 40% relief on gross business rates until 2034, for eligible film studios, and a new tax credit for independent British films with a budget of less than £15 million.
Orchestras, museums, galleries and theatres will benefit from a permanent 45% tax relief for touring productions and 40% relief for non-touring productions, while £26million will fund maintenance and repairs at the National Theatre.
Saving businesses cash
Small and medium-sized businesses will be supported to invest and grow through a £200 million extension of the Growth Guarantee Scheme.
This will help 11,000 small businesses to access the finance they need, and an increase in the VAT registration threshold from £85,000 to £90,000 will take around 28,000 small businesses out of paying VAT altogether.
Cutting tax on fuel and alcohol
We are maintaining cut to fuel duty by freezing it for the fourteenth consecutive year, helping keep motoring costs down.
This represents a tax cut for drivers this year of around £3.1 billion, saving the average car driver around £50.
And we’re extending the freeze on alcohol duty.
This will ease pressures on pubs, breweries and distilleries, across the UK, help reduce inflation, and mean that beer, cider, wine and spirits are cheaper for consumers.
Reforming our tax system
We’re making our tax system fairer by getting rid of the outdated concept of domicile and remittances.
By replacing it with a simpler residency-based system, we’ll make sure those who have established ties with the UK and benefit from our public services contribute accordingly.
Under the new system, anyone who has been a tax resident in the UK for more than four years will pay UK tax on any foreign income and gains, as is the case for all other UK residents.
Find the full Spring Budget here.