Chancellor Jeremy Hunt holding his red box outside 10 Downing Street, signally the arrival of a new budget (Picture: Getty/Metro.co.uk)
Jeremy Hunt is set to announce the spring budget this afternoon.
This will be the last budget before the next election, and the chancellor’s fourth since he took office in October 2022.
It’s also likely to be the last spring statement with the Conservative Party in government – if current polls predicting a Labour landslide are to be believed.
Bigger than the autumn mini-budget, the spring budget is when the government sets out tax cuts, tax hikes and spending on child benefit, public services, health and education.
The government has around £13 billion to play with, according to an estimate by the Office for Budget Responsibility.
This is a drop from the £30 billion figure estimated by the government’s independent economic forecaster, which would have allowed more room for tax cuts.
Such a drop is due to a rise in the cost of borrowing.
When is the Spring Budget 2024 and tax cut predictions
What time will Jeremy Hunt announce the 2024 spring budget today?
Chancellor Jeremy Hunt will announce the spring budget in the House of Commons at 12.30pm today in a speech expected to last around an hour.
It starts just after the weekly Prime Minister’s Questions.
After this, the opposition leader Sir Keir Starmer will respond to the chancellor’s statement.
MPs will then debate the contents of the budget before the government introduces a Finance Bill to make the budget’s proposals law.
What can we expect from the spring budget?
As the last budget before the next general election, we may see further cuts to National Insurance and other taxes in a bid to win voters’ approval after tax rates reached historic highs.
The government has been more explicit about their intentions in other areas, stating their goal of increasing defence spending to 2.5% of GDP.
However, whether they keep their word is another matter.
Hunt suggested the government would cut taxes in a ‘responsible and prudent’ manner, with a focus on ‘long-term growth’ in an interview with the BBC’s Sunday with Laura Kuenssberg programme.
The chancellor said: ‘The most unconservative thing I could do would be to cut taxes by increasing borrowing.
‘But I do want, where it’s possible to do so responsibly, to move towards a lower-tax economy, and I hope to show a path in that direction.’
Jeremy Hunt appeared on Sunday with Laura Kuenssberg last week (Picture: Jeff Overs/BBC/Handout)
National Insurance and Income Tax
Prime Minister Rishi Sunak and other Conservatives have been pushing for a cut to income tax, MailOnline reported.
But a cut of just 1p for every £1 would cost £7 billion, more than half the government’s estimated headroom, BBC News reported.
This makes it unlikely – but not impossible – for the government to announce cuts to the tax rate or changes to income tax brackets.
Instead they may settle for a two percentage point cut to national insurance – from 10% to 8% – which is cheaper because pensioners don’t pay it.
National insurance already dropped from 12% to 10% in last year’s autumn statement.
It is deducted from your monthly wages if you earn more than a £242 per week as an employee, or make a profit of £6,725 per week if you’re self-employed.
This is then put in a pot that funds state benefits like pensions, sick pay, maternity leave and unemployment benefits.
Both vapes and cigarettes are taxed with VAT, but only the cigarettes have a special duty applied to them – that might change in Budget 2024 (Picture: Andy Rain/EPA)
Tobacco, alcohol and vape taxes
Beers, ciders, wines and spirits carry different rates of tax charged at the point of production.
The government committed to freezing these alcohol duties until August 1 this year, meaning the tax won’t change today – not yet.
Companies producing or importing cigarettes are charged a tobacco tax, which is often passed to consumers in addition to VAT.
This pushed the price of a box of cigarettes up by £1.08 after the autumn statement announced a higher tobacco duty.
It’s likely to rise even further in a bid to discourage use of tobacco products.
The government is expected to introduce a new tax on vapes, which currently are taxed with VAT but not their own special duty.
The price you pay at the petrol pump might go up if the government doesn’t extend the temporary 5p decrease (Picture: John Keeble/Getty Images)
Fuel duty
Soaring fuel costs are making it more and more expensive to keep a car on British roads.
The fuel duty has been frozen at 57.95p since 2011, with a temporary drop of 5p in 2022.
But this freeze of the tax on fuels including petrol, diesel, biodiesel and bioethanol is due to end in March.
Hunt is expected to announce an extension of this 5p decrease for another year – at a cost of £5 billion – otherwise it will return to the frozen rate of 57.95p, Sky News reported.
Windfall tax on North Sea oil and gas
Soaring energy bills have brought pain, suffering and cold to families across the UK.
Meanwhile Shell, the UK’s largest oil and gas company, made profits of £22 billion in 2022.
Such companies operating in the UK and on the UK continental shelf were charged an extra 35% on top of the existing tax rate of 40% in 2022, in response to unexpectedly high oil and gas profits.
Officially known as the Energy Profits Levy, it raised roughly £2.8 billion in its first year.
Hunt is expected to extend it by an additional year to 2029.
Akshata Murty agreed to pay tax in the UK after her non-dom status caused controversy for husband, Prime Minister Rishi Sunak (Picture: Simon Walker / No 10 Downing Street)
Scrapping non-dom tax status
Non-domiciled tax status is for UK residents whose primary home for tax purposes is abroad.
Rishi Sunak’s millionaire wife Akshata Murty caused controversy when it emerged she was saving millions of pounds in tax thanks to having non-dom status.
She gave up the status, agreeing to pay tax on her overseas earnings, including dividends from her family’s business empire.
Now Hunt is expected to announce a scaling back, or even wholesale scrapping, of the special status in an effort to raise up to £3.6 billion to fund tax cuts.
99% mortgages and Lifetime ISAs
The government is considering the idea of introducing 99% mortgages, the Financial Times reported.
This would make it easier for first-time buyers by only requiring to place 1% deposit on a property.
But critics warned it puts borrowers at risk by lumping them with a lifetime of massive debt, particularly if falling house prices mean they owed more than theycan sell their home for.
In another nod towards first-time buyers, the government could make changes to Lifetime ISAs used to buy first homes.
Available to anyone aged 18 to 39, these involve the government adding a 25% bonus of up to £1,000 to your annual savings of up to £4,000 each year.
But if you use it to buy a property worth more than £450,000, you face a 6.25% withdrawal fee, meaning you can only take out £18,750 if you saved up £20,000.
Hunt is reportedly considering cutting the penalty rate and lifting the property price limit in a move money-saving expert Martin Lewis described as a ‘win’ for first-time buyers.
Childcare and child benefit
A government expansion of free childcare places is already due to begin in April.
But there could be further changes on the horizon after Hunt acknowledged the rules may be unfair in their current form.
As it stands, a family where two parents earn more than £50,000 combined receive the full amount of child benefit.
However, a single parent or a couple who aren’t working lose some of their child benefit entitlement if they earn more than £50,000.
It’s predicted the government might bump up the income threshold.
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