Chancellor Jeremy Hunt has just announced his spring budget for 2024 and it’s a big one. There are several big announcements from the abolition of ‘non-dom’ status to tax cuts, tax cuts, tax cuts. This article will set out the various developments, providing analysis of each one.

Tax Cuts

National insurance

One of the biggest trends in this year’s spring budget is tax cuts, likely in an attempt to woo election voters in the face of an upcoming election. Following on from a previous cut in the Autumn Statement, national insurance contributions will be further cut from 10% to 8% of earnings. As such, for someone on a £35,000 p.a. salary, this would represent a tax cut of £450.

Non-Domiciled Status

Further, non-domiciled status is coming to an end. This has been a contentious topic over the last few years and a major attack point for Labour. Now, Jeremy Hunt has brought in new regulations taking effect from April 2025, ultimately scrapping non-dom status as it was. This tax status referred to people who lived, but weren’t domiciled in the UK. Due to their status, they could claim a so-called ‘remittance basis’, meaning they weren’t required to pay tax in the UK on their foreign income. This applied to around 68,800 non-doms in the UK, with scrapping the status potentially raising around £3.7 billion by 2028. The new regulations set out that non-domiciled individuals will still benefit from not having to pay tax on their foreign income, however, only for the first 4 years after their arrival in the UK. Following this period, they will be required to pay full UK taxes. Transitional measures will be put in place for those who already enjoy this situation. This is an interesting move from the Conservatives, effectively pulling a crucial card out of Labour’s hands. This had been a flagship policy for Keir Starmer, now finding himself having to reassess some of his manifesto spending commitments.

Higher Property Capital Gains Tax

Finally, the Chancellor has announced a drop in higher property capital gains tax, from 28% to 24%. This tax only applies to those with multiple homes, and is seen as an attempt by the government to incentivise landlords and second homeowners to sell their properties, freeing up space for first time home buyers.

Fiscal Policy

In terms of the economy, there have been a number of developments announced.

  • The OBR (Office of Budget Responsibility) has predicted that the economy is set to rise by around 1-2% every year in the period from now until 2027.
  • Inflation is set to decrease to around 1.5% by June, a welcome message following a few years of cost-of-living squeezes for many households.
  • Further, the government has announced plans to sell a portion of NatWest shares, looking to return the bank to private ownership by 2026. The bank had been owned by the government following a bailout during the 2008 Financial Crisis.
  • The VAT registration threshold has been increased from £85,000 to £90,000 to try and provide more support for small businesses.
  • There will be a tax increase for airline passenger duty, especially those in non-economy classes.
  • In terms of public spending, the NHS budget will go up by £2.5 billion next year.

The British ISA

An interesting new policy that has been announced is the creation of the British Individual Saving’s Account (ISA). The Tories have been trying, over the last few years, to re-incentivise investment in the UK, especially since Brexit. One new measure is this ISA, a form of stocks and shares ISA, which allows investors to imbue an additional £5,000 into stocks, businesses, and debt on top of the already established £20,000 limit. Under this ISA, investments of up to £25,000 will be tax-free. This has been welcomed by City bosses, however, also gives rise to questions. Many have noted that most investors aren’t able to fulfil the £20,000 limits anyway, meaning this new measure realistically will only benefit wealthier individuals.

Vapes, Cigarettes, Alcohol and Fuel

Alcohol duty has been frozen again, with the deadline for this being extended until 2025. This is an attempt to continue supporting pubs and venues, with a considerable number of these having had to shut down in recent years due to the cost-of-living crisis and inflation.

Fuel duty has been frozen for the 14th year in a row, as well as extending the 5p cut, which Rishi Sunak had introduced in 2022, following the price escalations due to the Ukraine War. Hunt has explained that this should save the average household £50 for the next year. There has been criticism of this policy, with the Guardian noting that this will benefit wealthier households significantly more than poorer ones, while doing little for the economy and having a detrimental effect on pollution.

A vaping tax has been introduced, starting in October 2026, which is expected to raise £500 million by 2028/29. This is explained as being a measure to discourage children from buying the products, cutting underage vaping having been an important talking point of the Conservative party in the last few years. An increase in levies on tobacco has also been announced.

Summary

It is quite an extensive and obscure spring budget, with a variety of tax cuts looking to appease voters as we look to potentially enter a crucial election season. The non-dom status reforms are significant as they seem an attempt to put an obstacle in the way of Keir Starmer’s budget promises. Nevertheless, these tax cuts, as noted above, seem to employ a strange and sly methodology, still having a profoundly greater benefit on wealthier individuals than poorer ones, the latter being the crucial demographic that the Tories need to win back if they wish to stand a chance at the ballot.

Nevertheless, there are positives to take from it. A tax cut is a tax cut, which means that the British public will have more money in their pockets. There have been constructive developments in terms of growth, the UK looking to come out of recession, and inflation falling back down to around 1.5%. The NHS will get more funding and fuel and alcohol duty freezes will have a welcome impact on businesses and individuals.

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