As Jeremy Hunt prepares to unveil his 2024 Spring Budget, find out more about the latest predictions and rumours swirling with our quick guide
On 6th March 2024, the Chancellor, Jeremy Hunt, will present his Spring Budget. This is his opportunity to update us on the overall state of the UK economy and explain his fiscal plans. The Spring Budget 2024 also holds even more significance than usual as it may be the last issued by the current government ahead of the next General Election.
While the Spring Budget doesn’t usually come with big policy announcements and sweeping changes, the potential upcoming election may persuade the Chancellor to introduce new measures designed to swing votes in his party’s favour.
So, what might we hear announced on 6th March?
Tax cuts
Although Jeremy Hunt has downplayed suggestions that there will be widespread tax cuts, there are rumours that he might make changes to income tax, inheritance tax, and/or VAT for both individual taxpayers and businesses.
Inheritance tax is thought to affect only 4% of estates, but its general unpopularity could lead to rate cuts in the upcoming budget. Income tax thresholds for employed workers may also be increased (after being fixed since 2021/22), and small businesses might be given a boost if the annual VAT threshold is increased beyond the current figure of £85,000.
Simplification of ISAs
Several financial pundits predict that ISAs will be either simplified or amended as part of the Spring Budget 2024. Having been in place for almost 25 years, some legacy products are thought to be no longer fit for purpose, especially Lifetime ISAs. Hunt may announce an increase in the current £20,000 annual saving limit as well as reducing the early withdrawal charge applied to Lifetime ISAs from 25% down to 20%. It’s also rumoured that the minimum property price for first-time buyers saving their deposit in a Lifetime ISA will also increase to reflect the rise in house prices.
Child Benefit adjustments
The high-income child benefit charge threshold has been subject to criticism as its current setup penalises single-income families. Under the existing structure, a family with two earners and a combined income of £80,000 would be eligible to claim child benefits. However, a single parent or sole breadwinner with an annual salary of £70,000 would be deemed ineligible. This discrepancy may be addressed – and fixed – in the upcoming Spring Budget.
1% deposit mortgages
With inflation driving up mortgage interest rates and the rise in the cost-of-living eating into people’s disposable income, it’s become even more difficult for young; single; and low-income buyers to get a start on the property ladder. Introducing Government-backed 1% deposit mortgages could offer a solution, but there’s also a risk that this approach would be unpopular with voters as it doesn’t address the housing shortage and may lead to borrowers becoming saddled with unsustainable debt or in negative equity.
Fuel duty freeze
When petrol prices started increasing due to global events and escalating oil costs, drivers and businesses that rely on transportation of goods via road were impacted. A temporary 5p cut on fuel duty was introduced in 2022 but is currently due to end in March 2024. If the Chancellor chooses to announce a freeze on fuel duty and an extension the 5p cut, motorists could feel more favourable when the polls finally open.
Broadband cost increase prevention
As broadband becomes a household essential, it is predicted that the Chancellor could step in and cap the amount companies are able to charge for their services. This rumour may be due to the fact that the cost of broadband contracts rose by 17.3% last year, due to inflation. Introducing a price cap or reducing the amount a contract can increase by annually could help to protect the many people who rely on having affordable access to the Internat.
Wondering how the Spring Budget could affect your finances or if you need financial advice our team at My Debt Plan is here to help. Give us a call on 0161 8260 585 or send a message here
