As many of the changes announced in the Spring Budget 2024 are set to come into force in April, we’re taking a look at what it will mean for you and your finances
With many of the announcements made by the Chancellor of the Exchequer in his Spring Budget set to come into force in the new tax year, what will this mean for your finances?
We break down the points you need to know and how they might affect your personal circumstances ahead of April 2024:
Employees and self-employed workers will pay less National Insurance
While there were no cuts to income tax announced in Chancellor Jeremy Hunt’s Spring Budget, he did confirm that National Insurance contributions will decrease.
From April 2024, employees will see their contributions cut by 2p in every pound. This is a reduction from 10% of earnings to 8% for those with an annual salary between £12,570 and £50,270. The government claim that this will save the average worker over £450 a year.
Self-employed workers will also benefit as Class Four National Insurance rates will be reduced from 9% to 6%. This means a self-employed person earning £28,000 a year could save up to £650 in the upcoming tax year.
More parents will be eligible for full child benefits
As predicted, the Chancellor took steps to address the inequality in child benefit allowance for single parents and those with a higher income.
Full child benefit will now be paid to households where the highest earning parent earns up to £60,000, an increase from the previous cap of £50,000. This means fewer parents will be affected by the High Income Child Benefit Charge.
The Spring Budget also outlined plans to apply child benefit allowance to your collective household income, rather than the income of each individual parent, by April 2026.
Businesses can earn more before paying VAT
Small businesses also received a boost in the Spring Budget as the VAT threshold is set to increase from £85,000 to £90,000.
While many were hoping for a cut to business rates, the ability to earn a little more before facing a VAT bill may help ease some of the pressure for growing companies.
Debt relief orders won’t require a fee
A debt relief order (DRO) is a debt management solution designed for people who are severely struggling with their finances and have no way of getting back on track.
This legally binding solution allows you to stop making debt repayments for at least 12 months if you have less than £30,000 debt, less than £75 in disposable income, and no assets worth over £2,000.
A £90 fee used to apply, but this will now be scrapped from 6th April 2024 onwards.
Alcohol and fuel duty will be frozen, but vaping will be taxed
The tax due on alcohol – including beer, wine, cider, and spirits – and fuel duty will be frozen for another 12 months. The temporary 5p cut to fuel duty will also continue, saving the average driver approximately £50 each year.
In contrast, a duty will be imposed on vaping products from October 2026 along with a one-off tobacco duty designed to ensure vaping is still a cheaper alternative to smoking traditional tobacco products.
Which predictions did we not see in the budget?
While the 2024 Spring Budget did meet some of our predictions, there were several rumours circling that weren’t included in the announcements this time around.
There was little support offered for prospective homeowners, with no change to the lifetime ISA (such as increasing the house price threshold from £450,000 to £500,000) and no sign of any new government-funded products like 1% deposit mortgages that could help people get a foot on the property ladder.
Those who hoped that broadband costs would be capped or that inheritance tax rules would change were also disappointed as these issues weren’t addressed in the budget announcement.
Looking for support navigating the new changes or securing a DRO? Our team is here to help. Give us a call on 0161 8260 585 or send a message here
