The Spring Budget: Good news sprinkled within the political bluster

The Chancellor started his Budget briefing with a welter of fiscal updates on growth, spending and government debt. Frankly, a bewildering number of statistics, but within all that bluster, there were some genuinely welcome measures and some clearly politically motivated measures too - we are in an election year after all.

So, what measures may benefit your family and the wider economy?

A cut in National Insurance Contributions (NICs)

What was announced?
The Chancellor announced a fresh cut to National Insurance Contributions (NICs) for employees from 6 April.

Mr Hunt says he will reduce the rate by a further 2p, worth around £450 a year for someone on an average salary.

What does this mean?
This 2p cut will cost the government £10bn in total. How exactly this will be funded is yet to be seen, whilst the abolition of furnished holiday lets, rise of duty on vapes and tobacco, and changes to the ‘non-dom’ regime amount to a substantial figure, it still falls short by £5 bn.

As a result, the Government may find itself in more debt than it otherwise would have at the end of the forecast period.

Although this may not make you feel better off than you were before thresholds were frozen, you are going to be better off than you might have been without the 2p cut.

It's all relative and ultimately it is a 2p cut that we would rather have than not have.

Child benefit policies

What was announced?
The Chancellor is planning to consult on a new rule to make the benefit apply to collective household income, rather than on an individual basis, which he aims to introduce by April 2026.

In the meantime, to ease the strain, Mr Hunt has announced that the threshold at which the benefit starts to be withdrawn will rise from £50,000 to £60,000, with the top of the taper at which it is completely withdrawn increasing to £80,000 – up from the current £60,000.

What does this mean?
This means that the rate of taper will be halved compared to where it is now.

Apparently, that will mean 170,000 families will now qualify for child benefit, and half a million families will receive more child benefit than they do now because of those increases in thresholds.

On top of this, parents will also be reassured by the news that the rates of childcare payments covered by the Government for nursery care have been guaranteed for the next two years on the basis that this would assist more parents to go back to work and keep more parents in work.

Raising children is an expensive business, so this again, must be seen as good news.

Fuel duty freeze

What was announced?
The Chancellor’s confirmation that he’s keeping the “temporary” freeze and not implementing the 5p increase, means it will stay at 53p per litre for another 12 months. He says this will save average car drivers £50 next year.

What does it mean?
A large proportion of people, particularly trades people, or those operating a business rely on their fossil fuel driven transport. These modes of transport are difficult and expensive to replace with electric vans, lorries and cars, and therefore freezing fuel duty for another 12 months will give people a bit of a shot in the arm.

VAT threshold increase

What was announced?
The threshold for VAT registration will rise from £85,000 to £90,000.

This increase in the threshold at which small businesses and self-employed people have to register for VAT eases one form of fiscal drag and increases incentives for work.

What does it mean?
There was hope that the threshold would go much further, with many speculating that it would rise to at least £100,000. A move which would have better compensated for the freeze for the previous seven years than a £5,000 increase can.

Universal Credit loan provisions

What was announced?
According to Mr Hunt, one million households on Universal Credit take out budgeting advance loans to pay for more expensive emergencies like boiler repairs or help getting a job.

To help make such loans more affordable, the Government announced that it would double the repayment period for new loans to 24 months.

What does it mean?
For those on Universal Credit concerned about covering the costs of something as essential as a boiler or something absolutely essential, this will be very welcome.

However, I’m not convinced that extending the loan repayment period is going to make a great deal of difference. Again, something is better than nothing.

A change to the non-dom regime

What was announced?
The non-dom regime, which applies to certain individuals with particular circumstances, will be changed in April 2025 to a new and different regime, yet to be confirmed.

What does it mean?
Non-dom status applies to around 68,000 people in the UK – a minor percentage of our 70 million population and something which I believe does not warrant the amount of attention it receives and noise that it generates.

This strikes me as a slightly naïve move by the Chancellor and is perhaps aimed at stealing Labour’s political thunder rather than making a marked difference.

An NHS productivity plan

What was announced?
The Chancellor claims that the systems that support NHS doctors and nurses are often antiquated, with staff spending hours every day filling out forms and has therefore announced a £3.4bn investment to modernise NHS IT systems. This, he claims, will unlock £35bn of savings.

What does it mean?
The Government’s plan to implement an NHS productivity plan by investing £3.4bn, it is hoped will digitise patient records and use AI and automation to increase the number of appointments that consultants can take and operations that can be undertaken.

This move will apparently unlock £35 bn worth of savings per year - 10 times the amount of investment.

Of course, if this can make the NHS more efficient and help their money to go further, this can only be seen as positive.

However, I remain sceptical: if I add up the savings that I have heard announced in Budgets over the last 30 years since I've been working in tax, we probably wouldn't need to pay any tax at all. So, let's see how many appointments it really creates.

Capital gains tax on properties

What was announced?
The higher rate of capital gains tax (CGT) on residential properties will be reduced from 28% to 24%.

The Chancellor says that the lower tax rates will result in more transactions, leading to increased tax revenue.

What does it mean?
Selling your main residence remains exempt from CGT but if you sell a property that is not your main residence the tax rate sat at 28%. Therefore, if somebody has a rental property that they are thinking of disposing the 28% rate may deter them.
It is hoped that this tax cut will follow the logic of the Laffer Curve which claims that the lower the tax rate, the more revenue you raise because the fewer people will try to avoid it or refuse to pay it.

If this is the case, it would hopefully result in more residential property coming onto the market, potentially alleviating the current housing market supply problems. Only time will tell.

If you are worried about what the budget might mean for you and your finances, get in touch today, we would be happy to help.

Dominic Bourquin