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A round-up of todays’ Budget from Chancellor Jeremy Hunt, from Managing Partner Tony Bullock
6 March 2024

The Chancellor of the Exchequer's budget is set against a very challenging economic backdrop with a looming general election. The £400 billion bill for Covid and £100 billion bill for employment and energy support packages plus other financial headwinds (including much higher interest rates etc flowing from the discredited strategies pursued by the previous Prime Minister and Chancellor) have created an unenviable scenario upon which to portray to the electorate a government capable of taking the economy forward in a seemingly portrayed slightly improving environment. International events like the war in Ukraine continue to add to the overall economic problematic tapestry of many countries, particularly the UK. Many of the key budget features were heavily trailed pre-budget and thus no real surprises have emerged from the chancellor today, who is seeking to balance a very difficult scenario.

Here’s an overview of announcements for businesses:

Key features:

The key feature in the budget is the 2p in the pound reduction in employees National Insurance, but the unchanged income tax bands remain a fiscal drag attracting widespread criticism, especially amongst lower income earners and the overall tax burden remains stubbornly high for the foreseeable future.

Business and Investment:

  • The threshold at which small businesses must register to pay VAT is raised from £85,000 to £90,000 from April.
  • Covid era government loan scheme for small businesses extended until March 2026.
  • Tax relief for touring and orchestral productions due to end in March 2025 made permanent.
  • Fuel duty frozen again for another year.
  • Windfall tax on profits of energy firms extended until 2029.
  • Air passenger duty to go up for business class tickets.
  • A further £120m for green energy projects.

Property:

  • Higher rate of tax on profits from selling residential property cut from 28% to 24%.
  • Tax breaks for owners of furnished holiday let properties to be scrapped.

Taxation:

  • National Insurance cut by 2p in the pound for employees and the self-employed
  • Non dom tax regime to be replaced from April 2025.
  • £5,000 UK ISA tax allowance for savers investing in UK focussed shares to be set up.

Benefits and income support:

  • Child benefits to be paid to households where highest earing parent earns up to £60,000 – the current limit is £50,000.
  • Partial child benefit to be paid where highest earner earns up to £80,000.
  • £90 admin fee to obtain a debt relief order scrapped.

Public debt, inflation, and the economy:

  • OBR predicts UK economy to grow by 0.8% this year and 1.9% next year.
  • UK inflation forecast to fall below 2% target in just a few months’ time.
  • Underlying debt forecast to be 91.7% of GDP this year (excluding Bank of England debt).
  • Overall govt spending to grow by 1% in real terms over next 5-years.
  • NHS budget to go up by £2.5 billion next year, plus £3.5 billion up to 2030 to improve productivity.

In conclusion this was a difficult budget in a challenging time from a government long in power and dealing with an extraordinary economic and political balancing act. The verdict remains uncertain.


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