Budget 2024 – Spring Fiscal Event
This was a relatively lowkey unambitious fiscal announcement. It didn’t feel to me like the last roll of the dice before a general election in May. It seems to me that the Tories are still going to go for an election in October or November. Lower taxes mean higher growth said Chancellor Jeremy Hunt. That means more prosperity, more money for our public services.
Budget 2024: This is a budget for long term growth. How are we going to get that growth? Going well the headline pre-announced everyone knew, it was coming. A 2p cut in the headline rate of National Insurance from April to 8%. When you combine that with the 2p cut in National Insurance that was introduced in January from 12% to 10% the average worker in this country will be £900 a year better off.
That is not to be sniffed at, another tax giveaway is the freeze in fuel duty. Fuel duty on petrol and Diesel will remain at 52.95 per litre, just less than 53p for the next 12 months. That fuel Duty has been frozen since 2011 and that freeze is worth around £50 a year to the average motorists.
Alcohol Duty
A third giveaway, alcohol duty has been frozen for an extra 6 months until February 2025. It helps 38,000 pubs across the UK, our Publican sector.
Hospitality as a whole has been hammered in recent years and this is at least some help for them. More help for the enterprising Brits trying to get the economy growing. A rise in small business VAT threshold from £85,000 to £90,000 a year. You can now turn over £90,000 in your business without paying VAT. It’s the first rise in the VAT threshold for 7 years, again not too much, but worse than nothing at all.
New British ISA
Another pro-growth measure which the chancellor emphasized, a new British ISA that’s an individual savings account. If you want to invest in stocks and shares you get an extra £5,000 annual ISA allowance. If you invest that money in UK stocks and shares again trying to get the economy moving.
How are we going to pay for all this, all these giveaways one way the chancellor wants to pay for it is by extending the windfall tax on North Sea oil and gas extraction. From 2028 to 2029 companies operating in the North Sea and they’re often quite small companies. Not the big oil and gas majors are paying 75% now on their profits this year-long extension is estimated to raise £1.5 billion. But it won’t raise that money if the taxation is so high that the oil and gas companies just cancel the projects.
All together there’s a lot of anger about this in Scotland where our oil and gas industry are centred. Indeed the leader of the Scottish Conservatives has already said he will vote against this aspect of his own government’s budget. Another way to raise money the chancellor hopes is to clamp down on non-dom tax status. The often yacht dwelling foreigners who reside in the UK and they don’t pay much tax on their foreign income. That non-dom tax break is going to be abolished from April ‘25 the Tories very much stealing Labour’s clothes. The opposition have been saying they want to do this for some time.
Budget 2024: Tax on Luxury Airfares
It’s an increase also on duty on non-economic air fares. That is business and first class. Two more measures aimed at the wealthy trying to raise money, not to spend on more on public spending, says the Tories but to deliver tax cuts. That is the philosophical difference between them says the chancellor.
Vaping and smoking duty on vaping products is going to be introduced from 2026. It’s going to be paid on Imports and by manufacturers. That will be offset by a one-off rise in tobacco duty. Some people say that because vaping helps people stop smoking there should be no duty on vaping products. That’s a controversy to come and another tax raising measure.
End of Tax Perks for Landlords
In the Budget 2024, the chancellor wants to end tax perks for landlords with short-term holiday lets and other short-term rentals. This could affect everything from Holiday Homes to Airbnb and so on. The chancellor says he’s going to implement controls to tackle local pricing out of residents. Where short-term holiday lets are implemented to give local families a chance to buy and rent new homes.
There’s nothing compassionate about running out of money said Jeremy Hunt in a jibe at Labour. We’ve turned the corner on inflation and we will soon turn the corner on growth.
There were other measures in this budget, There was £5 million for Village Hall renovations. An extension will be welcomed by many lower income families in the household support fund.
There’s £4.5 billion of money that will be raised from clamping down on tax avoidance. That’s a big risk from the chancellor, but overall this was quite a low-key budget. It doesn’t feel to me like an election around the corner. It may not be true that this is going to move the needle and rescue the Tories electoral fortunes.