A Budget for Long Term Growth

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A Budget for Long Term Growth

The 2023 Autumn Statement presented to Parliament by The Chancellor, Jeremy Hunt, delivered a 110-point plan for boosting growth and promoting productivity. The Spring 2024 Budget announcement takes these plans further as The Chancellor looked to deliver a budget for long term growth which promoted productivity and innovation.

Setting aside the technical recession seen at the end of 2023, the International Monetary Fund (IMF) now expects the UK economy to deliver the third highest level of growth in the G7 over the 2024-28 period. Adding to the positive news, the Office for Budgetary Responsibility (OBR) forecasts that inflation will fall to the 2% target in Q2 of this year, one year earlier than previously forecast.

Carrying on the Government’s drive to promote innovative and creative industries, the Spring Budget allocates £360m to support R&D and manufacturing projects across live sciences, automotive and aerospace sectors, with a further £45m being allocated to accelerate research into diseases such as cancer, dementia and epilepsy. The current temporary tax relief for creative industries is to be made permanent with 45% tax relief for touring productions and 40% for non-touring productions.

Recognising that providing more funds for public services doesn’t necessarily mean better outcomes, the Chancellor has announced that further spending requests have to deliver increased productivity. In launching the Public Service Productivity Plan, the Chancellor has allocated an initial £4.2b investment, £3.4b of which will enable the NHS to invest in a technological and digital transformation. Not only will this deliver universal digital patient records, the NHS say this will deliver £35 billion in cumulative productivity savings from 2025-26 to 2029-30.

Turning to personal and household taxes, the Chancellor delivered a mixed package of tax reduction and support. One of the headline measures is the abolition of the Non-Dom tax regime from April 2025. In its place, comes a residency-based regime which will see those who have lived in the UK for more than four years paying tax on domestic and overseas earnings in the same way as other UK citizens.

Another headline measure is the move to assess the High Income Child Benefit charge on a household basis from April 2026. In the meantime, the threshold is to be raised from £50,000 to £60,000 with a taper up to £80,000. Other measures announced include:

· Universal credit claimants who need to take out emergency advance loans will see the payback period doubled to 24 months. The £90 charge for applying for debt relief orders is also to be abolished.

· A Vaping tax is to be introduced in October 2025.

· The freeze on an increase in alcohol duty is to be extended until February 2025.

· The fuel duty increase of 5p per litre which was due to come in this month has been extended until March 2025.

· The higher rate of CGT for residential property disposals will be cut from 28% to 24%. The lower rate will remain at 18%.

· The Furnished Holiday Lets tax relief scheme is to be abolished from April 2025.

· A consultation will take place on bringing in an additional £5,000 ISA allowance to support UK-focused assets.

And finally… From April 2024 Employee National Insurance is to be cut from 10% to 8% whilst self-employed National Insurance will fall from 8% to 6%. The Chancellor also signalled his long term ambition to abolish employee National Insurance when conditions allow.

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