Provided by: RS Risk Solutions Ltd

Main Takeaways from Spring Statement 2024

On Wednesday 6^th March, Chancellor of the Exchequer Jeremy Hunt delivered his Spring Statement to Parliament. The measures announced aim to “give much needed hope In challenging times” and provide “more opportunity, more prosperity and more funding for (our) precious public services.”

 Economic Forecast

Detailed in the Spring Statement, the latest economic outlook from the office for budget responsibility (OBR) revealed a relatively uneventful recent economic period compared to the past few years. Specifically, inflation has fallen to 4% and is expected to fall below the governments ideal 2% target by the second half of this year. The OBR predicts economy will frow by 0.8% this year and 1.9% in 2025.

However, this forecast should be considered with caution. For instance, the current escalation in the Middle East could see inflation increase to 7% the OBR warned.

Measures for Individuals

The announced Spring Statement measures that impact individuals include the following:

• National insurance contributions will be cut from 10% to 8% starting 6^th April 2024. Combined with the 2% cut in the Autumn statement, this reduction will save the average employee £900 annually.
• The non domicile tax regime where foreign nationals living in the UK but domiciled overseas avoid paying UK tax on overseas income will be abolished following a transitionary period.
• The child benefit threshold for full payment will increase from £50,000 to £60,000 from April and part payments may be made until an individual earns £80,000.
• The governments Household support fund will continue for a further six months to help those struggling with cost of living pressures.
• The government will introduce a new British Individual Savings Account (ISA) following a consultation, allowing an additional £5,000 of annual tax- free investment for savers.

Measures for Businesses

Here are the measures announced in the Spring Statement that impact businesses:

• The threshold at which small businesses have to register to pay value added tax will rise to £90,000 from 1^st April 2024.
• The COVID-19 government loan scheme for small businesses will be extended until March 2026.
• Alcohol duty will be frozen until February 2025, benefitting 38,000 pubs.
• Fuel duty will be frozen, meaning the 5p cut in fuel on petrol and diesel will continue for another year.
• A new tax on vaping products will be introduced following a consultation. However, there will be a one off increase in tobacco duty to maintain the financial incentive to favour vaping over smoking.
• Tax relief for furnished holiday lets will end in April 2025 to help free up the housing market for locals.
• The £10 billion tax cut for businesses that make capital investments in the UK, termed “full expensing” will be expanded further to include leased assets.
• The tax on flights will increase for business class tickets to account for high inflation.

Other Measures

As the NHS continues its recovery from the COVID-19 pandemic, it will receive an additional £2.5 billion this year to tackle pressing issues, including the length of waiting lists.

To view all announced measures, visit the government website.

Conclusion

The measures announced by Hunt are designed to promote economic growth and support public services. Although the economic forecast outlined within Hunts statement currently points to a more favourable position that seen previously, there is still a degree of uncertainty. As such both individuals and organisations should continue to brace for change and consider ways to increase resilience amid ongoing cost of living pressures.

Contact is today for further guidance.