Spring Budget 2024 Predictions

With the 2024 Spring Budget being the last one before a general election, it will be interesting to see how the government balances ongoing inflation battles with a cost-of-living crisis, and a relatively sluggish economy.

The cost-of-living crisis has put people’s finances in the public eye and is sure to be front and centre of the headlines at this election.

Looking at the polls, we can see Labour are well out in front and the Tories will need to weigh up the amount of fiscal headroom they have (and cynically how much fiscal headroom they may want to leave behind!).

Although faced with a sluggish economy and still not completely out of hot water with inflation, there are some positives for Chancellor Jeremy Hunt.

For example, public sector net borrowing fell to £7.8 billion in December 2023 which is certainly a large number. However, it is still around half of the previous year and is the lowest since 2019.

With the above in mind, what can we expect to see in the 2024 Spring Budget? Here are our predictions and what we’d like to see happen in March:

Possible Income Tax Cuts
 

There has been speculation that any headroom at all would be used on a Basic Rate tax cut. Hinting that the rate of income tax at the marginal rate could be reduced to 18%.

With the NIC cut in January, could we see even a 1% or 2% cut to the Basic Rate? It would certainly prove to be a popular decision. 

Perhaps now would be a good time to reverse some of the ‘silent tax hikes’ that we have seen with the frozen thresholds. It’s important to remember though that tax rates are different in Scotland.

VAT Changes
 

If the government does opt for expansionary fiscal policy, another rumoured change could be to raise the VAT registration threshold.

Whilst this could be good news for small businesses, it is important to consider how it would affect prices for everyday shoppers.

Investment into UK Enterprise
 

Brexit unlocked new possibilities for encouraging investment in UK companies. And there is now greater flexibility regarding how incentives are applied to UK companies compared to foreign shares.

It was rumoured in the Autumn Statement that ISA investors could be encouraged to invest in UK listed shares. So, it will be interesting to see if there are any further details released in next month’s budget.

Inheritance Tax (IHT)
 

A potential end to inheritance tax is a possibility, although it has been downplayed by the Government. 

Only 4% of estates have been subject to the tax but it has proven to be unpopular. A change to IHT could prove to be a welcome tax break, costing the Government relatively little in lost revenue.

Read our IHT Guide to see how current guidelines may affect you.

Child Benefit Payment Reform
 

After a lot of recent media attention, the current threshold for child benefit being based on a single person earning over £50k is likely to be reviewed. 

Currently, a couple with a combined income of £49k each is eligible for child benefit. However, if one partner earns £70k and the other earns £28k, they will not receive support. Therefore, we could see some changes and equalisation. 

Martin Lewis in particular has been campaigning for this change, so it is possible we will see some sort of movement on this issue.

Cigarette and Alcohol Duty
 

Cigarettes and alcohol are always easy wins for tax from the government. However, it has previously been hinted that alcohol duty may not increase in this budget.  This may be different in Scotland.

What to expect from the upcoming budget?

Ultimately, we all want tax cuts that put more money in our pockets. This could boost spending, savings, and potentially even influence interest rates. And a strong economy benefits everyone, so we hope the Chancellor considers this.

Whatever the Chancellor has in store for the budget, we’ll be ready to review and dissect what any changes may mean for you and your finances. If you have any queries relating to your finances, you can get in touch with us.