The Budget 2024

Today (Wednesday 6 March) saw Jeremy Hunt announce the latest budget.  We in the NTI newsroom have cut through the political flim-flam to bring you the salient points.

Unfortunately for every worker’s pockets (but probably best for the economy as a whole), the chancellor chose to continue a temporary tax which was introduced by William Pitt the Younger in 1799 to deal with the threat from Napoleon.  That tax raises £268billion every year according to figures from the Institute for Fiscal Studies. 

The two headline measures widely predicted were within the speech.  The first was the 2p cut to National Insurance Contributions, which for an employee on an average salary, will be worth around £450 a year.  The same 2p cut will also apply to those who are self-employed.  This further cut is in addition to the cut which took effect in January.

The second measure was an amendment to Child Benefit rules will be moved to a household-based approach from 2026.  The current threshold of the high-income child benefit charge will be raised to £60,000 (rather than £50,000) with the upper limit at which all the benefit is withdrawn rising to £80,000 (currently £60,000) as temporary fixes until then.

One of the Chancellor’s first statements, which has not made many summaries we have seen so far, was to abolish the fee for a Debt Relief Order (“DRO”), which currently stands at £90.  The fee will be abolished from 6 April 2024.

Currently, an individual is eligible for a DRO if they owe less than £30,000, have assets of less than £2,000 (plus a vehicle of £2,000) and a surplus income of less than £75 a month.  From 28 June 2024, the debt limit will be rising to £50,000 and the value of the vehicle allowable will be increased to £4,000.  It will be interesting to see in the next few months the impact these changes have on both personal insolvency as a whole, but also the numbers of Bankruptcies and IVAs.

In other measures:

·        Alcohol and fuel duty will remain frozen until next year.
·        The VAT threshold will rise to £90,000 a year from April having been frozen for seven years.
·        The Office for Budget Responsibility predict inflation will fall below 2% in two months’ time.
·        The launch of a British ISA with an annual allowance of £5,000.
·        An excise duty on vaping products from October 2026 (which will be cheaper than tobacco).
·        Capital Gains Tax on property reduced from 28% to 24%
·        The well known “non-dom” rules (which were brought into the public eye as a result of the tax status of Mrs Sunak) were abolished and a new scheme to be introduced from 2025.
·        HMRC will be given £140m to “improve HMRC’s ability to manage tax debts”.

The temporary tax we mentioned – It’s Income Tax, and it set to remain with no alternations.