2024 UK Budget: What’s New and What It Means for You

In a pivotal moment for the UK’s economic future, Chancellor Jeremy Hunt announced the 2024 UK Budget. He aimed to foster growth, support families, and stimulate investment amidst challenging global dynamics. The budget addresses inflation, improves public services, and sets a foundation for sustained prosperity.

Tax Adjustments: A Balancing Act

Central to the UK 2024 Budget are the strategic tax cuts aimed at putting more money back into the pockets of workers and parents. A notable reduction in National Insurance contributions by 2p in the pound promises significant savings for employees and the self-employed alike. For the average worker, this translates to an estimated annual saving of £450, which could double to £900 when combined with a similar reduction from the previous autumn.

While there were murmurs of a potential cut to income tax, the Chancellor opted instead for targeted relief, financing these cuts through selective increases elsewhere. These include hikes in business class airfares, duties on short-term holiday lets, and the introduction of duties on vapes and tobacco from October 2026.

Amidst these changes, the Chancellor has chosen to freeze fuel duty for the 14th consecutive year and extend the alcohol duty freeze to February 2025, offering a reprieve to motorists and supporting the hospitality sector.

Tax Reductions

• A decrease in National Insurance contributions by 2p in the pound
• Continuation of the fuel duty freeze
• Extension of the alcohol duty freeze
• Elevation of the child benefit eligibility threshold to £60,000
• Introduction of tax incentives for investors through the new ‘British ISA’
• Expanded tax deductions for businesses under the ‘expensing’ relief scheme

Tax Increases

• Elimination of the non-domicile tax status and new scheme introduced
• Introduction of duties on vapes and tobacco starting October 2026
• Increased duty on business-class air travel
• Discontinuation of tax benefits for short-term holiday rentals

VAT Threshold Increase: A Boost for Small Businesses

In an effort to support small businesses, the 2024 Budget introduces a significant VAT threshold increase from £85,000 to £90,000. This move aims to reduce the administrative burden on small business owners and encourage entrepreneurial activity. By raising the VAT threshold, more small businesses can focus on growth without the immediate pressure of VAT registration and compliance.

Decrease in Higher Rate Capital Gains Tax for Residential Property

Additionally, the budget brings good news for property investors with a reduction in the top rate of capital gains tax (CGT) on residential property sales. Effective from 6 April 2024, the elevated rate will be reduced from 28% to 24%. 

Innovation and Investment: Fuelling Economic Growth

A new financial vehicle, the ‘British ISA’, is introduced, providing an additional £5,000 tax-free allowance for investments in UK companies. This move is designed to bolster the domestic equity market and support the growth of UK businesses, offering an attractive option for savers looking to contribute to the nation’s economic vitality.

The extension of “full expensing” relief for businesses making capital investments in the UK, which now includes tax relief for leased assets, further emphasises the Chancellor’s commitment to business innovation. This, along with additional support measures like the £200 million allocation to the post-pandemic Recovery Loan Scheme, signals a robust effort to stimulate business activity and innovation.

Addressing Public Services and Infrastructure Needs

The budget places a significant emphasis on enhancing public services, with the NHS receiving an additional £2.5 billion to address pressing issues, including lengthy waiting lists. Public sector productivity is a key focus, with investments earmarked for speeding up police response times and upgrading NHS computer systems—a move expected to unlock substantial savings and improve service delivery.

Infrastructure and housing also receive a boost, with investments supporting the construction of nearly 8,000 homes in strategic locations like Barking Riverside and Canary Wharf. These initiatives not only address the urgent need for housing but also aim to foster innovation by transforming Canary Wharf into a new hub for life science companies.

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