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07 March 2024

Spring Budget Statement 2024 Analysis

Tess Williams, Head of Financial Planning

As the pre-budget debate ran and the BBC’s Laura Kuenssberg questioned the Chancellor, it was clear that not much information was going to be shared about the content of the budget.
 
The biggest question was whether Jeremy Hunt would have the fiscal headroom to introduce a 2% decrease in National Insurance.
 
Delivered with the musical phrasing of a sonata building towards its climatic finale the detail was large but the volume was quiet unlike the audience, lots of repetition of variations on a theme but no big chords to amplify the sound, until a few twists in the final stages.

The Chancellor was very upbeat about the state of the economy - inflation down (to 4%), debt reducing and growth a full 1.5% higher than predicted.

So, what did the Chancellor announce?

National Insurance

The foretold National Insurance cut of 2p from 6th April 2024 combined with the tax cuts announced at the Autumn Statement 2023, amount to a saving of circa £900 per year for someone on a salary of £35,400 - may feel like a relief from some of the pressure of tax in a higher cost environment. With workplace pension contributions of 4% for most, putting this saving into a pension or other vehicle for your future, such as an ISA could be a prudent move to plan for you future before you get used to the benefit of the saving.

British ISA

The confirmation that there will be a new additional ISA allowance through the British ISA is encouraging, and we await with interest the detail of how it can be invested. It will be interesting to see if investment trusts can be held in this. Further details are yet to be released, but we know the £5,000 allowance will be on top of the current £20,000 ISA allowance.
 
Savings

A new British Savings Bond with a guaranteed interest rate fixed for three years through National Savings and Investments was announced and depending on the rates offered this may provide a safe haven for longer term savings or funds kept on deposit to balance the risks of an investment portfolio.

Capital Gains Tax on Residential Property

While the abolition of the Multiple Dwellings Relief was expected, the reduction of Capital Gains Tax (CGT) on residential property was a surprise. Reduced from 28% to 24% would equate to a £4,000 saving for every £100,000 of property gain. An opportunity for those thinking of selling a second home or buy-to-let.

At a Glance: Spring Budget Guide
  • Non-doms: Current non-domiciled tax system to be abolished. From April 2025 new arrivals will face no tax on foreign income and gains for four years of residency - after four years they will pay the same tax as other UK residents.
  • Fuel Duty: Cut remains in place for another 12 months.
  • VAT threshold: Increased from £85,000 to £90,000 to help smaller businesses.
  • Alcohol Duty: Freeze extended until 2025.
  • Oil and Gas: Energy profits levy extended to 2025.
  • Changes to the higher rate child benefit system: This is to be moved to household-based income system by April 2026. In the meantime, threshold increased from £50,000 to £60,000– top of the taper increased from £60,000 to £80,000.
  • Childcare: Rates for providers were announced for the promised 15 hours of free childcare for all children from the age of nine months from September 2024 and 30 hours for all under-fives from September 2025.
 
Alastair Power, Investment Research Manager
 
Investment and Growth
 
We’re encouraged by the announcement of the new British ISA, creating a further ISA allowance for domestic investors. The UK has some fantastic businesses, which often go unrecognised, and directing investment into the UK market is expected to be positive in the long run. 
 
Within his speech, Jeremy Hunt highlighted investment as the best method of stimulating growth. I’d agree with this statement and further legislation, such as the enabling of full expensing on leased assets, are aligned with improving investment levels. 
 
Interest Rates
 
High interest rates continue to be a significant barrier to investment growth, given the opportunity cost associated with new investment, while the return on cash deposits is at current levels. Lower interest rates are expected to be an important component to stimulating business investment activity and with forecasts of inflation falling below the Bank of England’s 2% target level in the coming months, interest rates are almost certain to fall through the year.
 
These are some of the key updates from the Spring Budget 2024, setting out current financial themes, with the anticipation of a general election potentially at some point this year.   
 
Regular news and updates from Redmayne Bentley can be found in the Latest News section of our website and in our monthly Publications (now available in audio format).
 
 
Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. Investments and income arising from them can fall as well as rise in value. Past performance and forecasts are not reliable indicators of future results and performance. There is an extra risk of losing money when shares are bought in some smaller companies.  
       

Please note that tax treatment depends on the specific circumstances of each individual and may be subject to change in the future.  

Redmayne Bentley has taken steps to ensure the accuracy of the information provided.    
 
 
Spring Budget Statement 2024 Analysis

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