The Budget 2024 – Our Highlights

March 11, 2024

On Wednesday, The Chancellor, Jeremy Hunt, delivered his 2024 Budget. Mr Hunt described it as “a long-term growth plan”. Leader of the opposition, Sir Keir Starmer called it “the last desperate act of a party that has failed.”

The last spring Budget before the anticipated general election sometime this year, it seems likely that these latest announcements are more grounded in their potential political impact on voters than their long-term fiscal success. Are the headline-grabbing tax cuts all they appear to be?

Below, we’ve highlighted a handful of the announcements that we consider most interesting.

Introduction of the £5,000 tax-free UK ISA

We thought this was a pretty neat idea. With the aim of encouraging more people to invest in British products, savers will be allowed to put £5k a year into a British Isa – a stocks and shares ISA for UK-Listed companies only. This will be on top of the current £20k tax-free limit.

There’s no start date for this as yet, but any new tax-free savings opportunity gets a thumbs up from us!

Reforming the high-income child benefit charge

This was perhaps one of the biggest surprises of the Budget. Currently, parents must pay back some of their Child Benefits once either parent earns more than £50,000. If either earns over £60k, it must be paid back in its entirety. This is known as the High Income Child Benefit Charge (HICBC).

The higher threshold is being increased to £80k with repayments tapering to the lower threshold which is being increased to £60k. This is expected to take 170,000 families out of paying HICBC and will equate to savings for nearly half a million families.

There are further plans to review this system to remove the current unfairness by shifting from an individual income-based system to a household-based system.

CGT reduction to 24% at highest rate

From 6 April 2024, the higher rate of Capital Gains Tax for profits from selling property that is not the main residence will be cut from 28% to 24%. This is expected to increase overall revenues as it will stimulate more transactions.

The lower rate will remain the same at 18%.

Reduction in National Insurance contributions

This was the big headline from the 2024 Budget. Mr Hunt cut NI by 2p, reducing the rate paid by employees from 10% to 8%, and from 8% to 6% for the self-employed. This is meant to help boost post-tax incomes by around 0.5% on average, with the biggest cash benefit going to the higher earners.

However, with other recent tax rises announced and the fact that income tax thresholds have not been changed, despite wages increasing to keep up with inflation, many people will not feel better off.

What’s the reaction?

As with any politically-fuelled announcement, reactions from the public are very mixed. Some are grateful for the NI reduction, others worry that the reduction in contributions to the public purse will result in a fresh squeeze on public spending. Some argue that larger long-term tax reform would benefit people more than the tinkering we’ve seen in recent years. One for the next government to think about?