Spring Budget 2024

Spring Budget 2024

Duty frozen in the last-chance saloon 

Last week’s Spring Budget was eagerly anticipated, not least because it could yet turn out to be the last of the current Conservative era. Technically any General Election does not have to take place until the end of January 2025, but there is a growing belief that the UK will go to the polls sometime in 2024. This notched up the significance of this budget by a few degrees.

Jeremy Hunt, will have had an election in mind and with the Conservatives lagging in the opinion polls, he might have been tempted to throw in a few pre-election goodies, which is not uncommon in election year. But he would also have been mindful of the fateful budget under the short Liz Truss era only 18 months ago which rattled markets and undermined the pound.

The result was an unenviable task of trying to please a wider cross-section of society, with limited financial room for manoeuvre and maintaining fiscal prudence. Remember it was not Kwasi Kwarteng’s caution, but his profligacy that sent financial markets into a tailspin in 2022. There was good news for the Chancellor on the inflation front which is providing a rare political ‘safe zone’ for Messrs Hunt and Sunak, given it looks like potentially being the only one of the PM’s five pledges to be met. Falling inflation will be welcomed by voters, though quite how much credit the occupants of Downing Street can take for this, is a matter of conjecture.

As it turns out, Mr Hunt’s announcement did provide some eye-catching initiatives such as the British ISA, but collectively his measures probably did little to move the political dial that much. Instead, they might even serve to complicate some of the economic challenges facing whoever prevails when it comes to election time, according to Paul Johnson at the Institute of Fiscal Studies. There is very little to suggest a marked departure from the high debt, low growth environment we find ourselves in right now and that is not a great platform from which to be fighting an election.

Some of the key initiatives were as follows.

The Economy

  • The Chancellor said the economy is expected to grow by 0.8% this year and 1.9% in 2025. That is slightly stronger than the 0.7% and 1.4% growth rate expected by the Office for Budget Responsibility (OBR) at the time of the autumn statement in November. Growth is then forecast to be 2% in 2026 before dipping to 1.8% and 1.7% in 2027 and 2028.
  • Inflation is expected to fall below the government’s 2% target in ‘just a few months’ according to Mr Hunt down from 4% in January. Getting back to within target would be ‘a whole year earlier than forecast in the autumn statement’ he added. The Bank of England’s long-term target is to keep inflation at a “low and stable” 2%. Inflation is down sharply from a peak of 11% in October 2022, as food and energy price pressures have eased
  • Mr Hunt said underlying debt, which excludes Bank of England debt, will be 91.7% of GDP in 2024-25 according to the OBR then peak at 93.2% before falling back to 92.9% in 2028-29.
  • Hunt says borrowing falls from 4.2% of GDP in 2023-24, to 3.1%, 2.7%, 2.3%, 1.6% and 1.2% in 2028-29.
  • On public services, Mr Hunt faced the problem experienced by Rishi Sunak at almost every Prime Minister’s Questions, which was to try and make an argument they are performing well, when the perception amongst the electorate might be different. Some of the measures announced included:
    • A 1% increase in day-to-day public spending above inflation, despite speculation it would be cut to just 0.75%
    • Military spending will rise to 2.5% of GDP ‘as soon as economic conditions allow’ up from the current 2% of GDP
    • The Chancellor announced a ‘landmark public sector productivity plan’ aimed at cutting form-filling by doctors using AI, digitising hospital processes and improving the NHS app. He added ‘we need a more productive state, not a bigger state’. Looking for efficiency savings within the NHS is nothing new but there is money to try and make this more of a reality
    • He went on to say ‘I want this groundbreaking agreement with the NHS to be a model for all our public services including education, the police, courts and public government’. In the next spending review, the Treasury will prioritise applications for money from departments that show potential savings for the public purse in the long term.


Personal taxation

  • The main rate of Class 1 employee National Insurance Contributions (NICs) will be reduced by 2p from 10% to 8% from 6 April 2024. This is in addition to the 2p cut announced at Autumn Statement 2023 with effect from 6 January 2024. This measure was widely expected
  • The main rate of Class 4 NICs, paid by self-employed earners, will be reduced by 3p from 9% to 6% from 6 April 2024. This replaces the cut to 8% announced at Autumn Statement 2023
  • A consultation will be launched later this year to deliver a commitment to fully abolish Class 2 National Insurance. This follows the announcement at the Autumn Statement 2023 that from April 2024, no self-employed person would be required to pay Class 2, whilst those who pay voluntarily, will continue to be able to do so to build entitlement to contributory benefits
  • The threshold for the High Income Child Benefit Charge will rise from £50,000 to £60,000 from 6 April 2024, and there will be a tapered charge between £60,000 and £80,000. The government will also consult on moving to a household-based system rather than one based on individual incomes from April 2026.
  • The higher rate of Capital Gains Tax on residential properties will change from 28% to 24% after 6 April 2024. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band
  • Abolition of the Furnished Holiday Lettings tax regime from 6 April 2025
  • Legislation in the Spring Finance Bill 2024 to ensure individuals cannot use a company to bypass anti-avoidance legislation, known as Transfer of Assets Abroad (ToAA) provisions, to avoid UK income tax. The changes will take effect for income arising to a person abroad from 6 April 2024.
  • The government will improve and simplify HMRC’s digital services to support self-assessment taxpayers seeking to pay tax in instalments and these changes will be implemented from September 2025.
  • From 1 April 2024, personal representatives of estates will no longer need to have sought commercial loans to pay inheritance tax before applying to obtain a “grant on credit” from HMRC.


Abolition of Non-UK Domiciled Individuals

The government will abolish the current tax regime for non-UK domiciled individuals and replace it with a residence-based scheme:

  • From 6 April 2025 the government will introduce a new residence-based regime. Under this, anyone who has been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains, regardless of their domicile status, with a four-year relief for new arrivals (provided they have been non-tax resident for the last ten years)
  • Transitional arrangements for existing non-doms claiming the remittance basis will include an option to rebase the value of capital assets to 5 April 2019 and a temporary 50% exemption for the taxation of foreign income for the first year of the new regime (2025-26)
  • The government will also introduce a two-year Temporary Repatriation Facility for individuals who have paid tax on the remittance basis prior to 6 April 2025 to bring previously accrued foreign income and gains into the UK at a 12% rate of tax
  • Eligible employees will also be able to claim Overseas Workday Relief in their first three years of tax residence for income from employment duties carried out overseas
  • The government also intends to move to a residence-based regime for Inheritance Tax and will consult in due course on the best way to achieve this. No changes to IHT will take effect before 6 April 2025



The government intends to bring forward requirements for Defined Contribution pension funds to publicly disclose the breakdown of their asset allocations, including UK equities. The Financial Conduct Authority (FCA) will consult on this in due course. The government will introduce equivalent requirements for Local Government Pension Scheme Funds in England and Wales, potentially as early as April 2024. Further measures may then be announced if the data does not demonstrate that UK equity allocations are increasing. In addition, the government is working with the FCA and the pension regulator on the Value for Money pension framework. The framework will highlight where pension schemes are focusing on short-term cost savings at the expense of long-term investment outcomes. Where persistently poor outcomes for savers are found, the FCA and The Pension Regulator will have regulatory powers to intervene.


  • The government has announced the launch of a new UK ISA and British Savings Bonds. The UK ISA will be a £5,000 allowance in addition to the existing ISA allowance and will be a new tax-free product for people to invest in UK-focused assets.
  • The British Savings Bonds will be delivered through National Savings and Investments and will be launched in April 2024. This product will offer a guaranteed interest rate, fixed for three years, increasing the savings opportunities available to consumers.


Business tax

  • At the Autumn Statement 2023, the government made full expensing permanent, allowing businesses to write off the full cost of qualifying plant and machinery investments against their taxable profits. The government has now announced that full expensing will be extended to assets for leasing when fiscal conditions allow and will shortly publish a draft legislation.
  • The government has announced over £1 billion of new tax reliefs for the UK’s creative industries, including a 40% relief from business rates for eligible film studios in England for the next 10 years, introducing a new UK Independent Film Tax Credit, and an increase in the rate of tax credit by 5% and removal of the 80% cap for visual effects costs in the Audio-Visual Expenditure Credit. In addition, a permanent extension will be made to tax relief for theatres, orchestras, museums and galleries.
  • The introduction of a new Reserved Investor Fund, a tax-efficient investment fund vehicle for institutional investors. The government will begin legislating on this in the Spring Finance Bill 2024.
  • Further details were provided on current Investment Zones. Investment Zones will also be extended from five to ten years in Scotland and Wales, with full details being announced later this year. Details on the Northern Ireland Investment zone will be published shortly
  • The Energy Profits Levy will be extended for an additional year until March 2029. It will also implement legislation to ensure that the Energy Profits Levy will end when oil and gas prices fall below the levels set by the Energy Security Investment Mechanism if this is prior to March 2029.
  • HMRC will establish an expert advisory panel to support the administration of the R&D tax reliefs. The panel will provide insights into the cutting-edge R&D occurring across key sectors such as tech and life sciences, and work with HMRC to review relevant guidance, ensuring it remains up to date and provides clarity to claimants.


Indirect taxation

  • The VAT registration threshold for VAT will rise to £90,000 and the VAT deregistration threshold to £88,000 from 1 April 2024
  • The government will maintain the rates of fuel duty at the current levels for a further 12 months, through extending the temporary 5p cut and cancelling the planned increase in line with inflation for 2024-25
  • Alcohol duty will be frozen at current levels until 1 February 2025
  • Vaping products duty to be introduced of £1.00 per 10ml for nicotine free liquids, £2.00 per 10ml on liquids that contain 0.1-10.9 mg nicotine per ml, and £3.00 per 10ml on liquids that contain 11mg or more per ml from 1 October 2026 with registrations for the duty opening from 1 April 2026. The government published a 12-week consultation on the policy design and technical details alongside the Budget. The government will also introduce a one-off tobacco duty increase of £2.00 per 100 cigarettes or 50 grams of tobacco from 1 October 2026
  • The government will increase the non-economy class rates of Air Passenger Duty from 2025-26 but duty for economy flights will remain frozen
  • Landfill tax rates for the year 2025-26 will be adjusted to better reflect actual RPI. The standard rate of Landfill tax will increase to £126.15 per tonne and the lower rate will increase to £4.05 per tonne
  • Following review, the government will maintain the difference between road fuel gas and diesel duty rates until 2032.
  • Stamp Duty Land Tax, multiple dwellings relief will be scrapped from 1 June 2024.

The market reaction was muted, but then several of the measures such as the reduction in National Insurance had been leaked well in advance. But this also reflects the conflicted nature of the budget. Politically he needed to throw some money around, but he couldn’t afford to, and investors knew that, so given the fate of his predecessor, Mr Hunt may well be quite content that markets barely reacted. The pound strengthened slightly continuing a theme since the start of the year, and government bond yields dipped (prices rose) as investors accepted that the UK’s stodgy economic performance probably warrants interest rate cuts sooner rather than later.

If there is anything in the budget you need to know more about, please do get in touch with your CDC adviser who will be happy to help.


Dr Andrew Mann

Investment Director