Article Spring Budget 2024 – what it means for you

The 2024 Spring Budget was announced on 6 March and the Government has made some changes relating to tax and savings. Here’s what it could mean for you.

Key announcements from the Spring Budget

1.  Cuts to National Insurance rates:

• Employee (Class 1) National Insurance rate cut from 10% to 8%
• Self-Employed (Class 4) National Insurance rate cut to 6%

2. New UK Individual Savings Account (ISA) unveiled with an additional £5,000 allowance

3. Changes to Child Benefit charges and several other announcements will support UK households

Let’s go into detail about what these changes might mean for you.

1.  Cuts to National Insurance rates

Employee (Class 1) National Insurance rate cut from 10% to 8%

Following the unexpected cut to National Insurance (NI) announced in the 2023 Autumn Statement, the Government has further reduced NI. The standard NI on income between £12,570 and £50,270 has been reduced from 10% to 8%. The change will come into effect from 6 April 2024.

What does this mean for workers?

Everyone earning over £12,570 will see an increase in their take-home pay, although higher earners will see a greater benefit. Comparing a full tax year paying the current 10% of NI, versus a full year on the new 8%, here are some examples of how the cut could affect your take-home pay.

• A salary of £25,000 equals an extra £248.60 a year in take-home pay
• A salary of £35,000 equals an extra £448.60 a year in take-home pay
• A salary of £50,000 equals an extra £748.56 a year in take-home pay

Self-employed (Class 4) National Insurance rate cut to 6%

In the 2023 Autumn Statement, the Chancellor announced a cut in NI for the self-employed, from 9% to 8% This was due to take affect from 6 April 2024. However, the Chancellor has now announced a further cut, down to 6% on profits between £12,570 and £50,270. The change will come into effect from 6 April 2024.

As an example, if you have profits of £40,000 this works out as a saving of £822.90 a year against the existing 9% rate.

What do NI cuts mean for those at State Pension age?

If you’re at State Pension age (currently 66 but rising to 67 by 2028), you won’t see a benefit from a reduction in NI, as you’re already exempt from paying this.

However, it’s not all bad news – in the Autumn Statement it was confirmed that the full State Pension will increase this April from £10,600 to £11,502 a year.¹ This is an increase of 8.5% – more than double current inflation (4%).

2. New UK Individual Savings Account (ISA) unveiled with an additional £5,000 allowance

The Chancellor has announced a new ‘UK ISA’. This will be subject to a consultation by the Treasury and other industry experts.

The initial proposal is that the UK ISA would have its own ISA allowance of £5,000, to invest in the UK. This would be on top of the current £20,000 allowance across other ISA types. This means you could pay in £25,000 across different ISA types in a single tax-year before incurring a tax charge.

The specifics of the rules of the UK ISA and how it works in principles will be discussed through the consultation before it's launched.

3. Changes to Child Benefit charges and several other announcements will support UK households

The Government made several announcements that are likely to benefit UK households, particularly lower earners.

Child Benefit reforms

Currently, anyone claiming child benefit is required to pay some of it back if they earn over £50,000, or all of it if they earn over £60,000. This is called the High Income Child Benefit Charge. It’s been acknowledged that these rules are unfair as a single person earning £50,000 would be required to pay some back, while a two-adult household earning £49,000 each wouldn’t.

The Chancellor announced that the Government will consult on moving to a household-based system to be introduced by April 2026. However, from 6 April 2024, the threshold for having to pay the High Income Child Benefit Charge will be raised from £50,000 to £60,000. It’s estimated that this will benefit around 170,000 families – as they will no longer have to pay the charge.

Loan repayments extended from 12 to 24 months for those on Universal Credit

To help make loans more affordable for those claiming Universal Credit, the standard repayment period for new loans will be increased from 12 to 24 months.

On top of this, the Government have also abolished the £90 fee to apply for a Debt Relief Order (one way of dealing with personal debts you cannot pay).

Household Support Fund extended for another 6 months

The Household Support Fund, which was introduced in October 2021 to support lower income households through the cost of living crisis, has been extended for six months until September 2024. While the fund is specifically for English households, money will also be given to the Governments in Scotland, Wales and Northern Ireland to support people in these areas.

5p cut on fuel duty to remain for another 12 months

Fuel duty – a tax that’s included in the price you pay for petrol, diesel and other fuels used in vehicles – was cut by 5p in March 2022. At the Spring Budget it was announced that it will remain at the current price of 52.95p per litre for the next 12 months. The Government estimates that this will save the average car driver £50 next year.

What else was announced?

A new tax on vaping products and one-off increase in tobacco duty

The Chancellor has introduced a new ‘Vaping products duty’ from October 2026. A consultation is in place to determine how the duty will be designed and implemented.

However, to make sure that vaping is still cheaper than smoking, a one-off increase in tobacco duty will also take place at the same time.

Higher rate of Capital Gains Tax (CGT) on property cut from 28% to 24%

This means that for higher tax-payers, the tax on profit from selling property that has increased in value, will be reduced. The 18% rate for gains that fall within your basic rate tax band will remain.

Pension ‘pot for life’ still in consideration, but not racing ahead

The Chancellor touched very briefly on the ‘pot for life’ pension model, where you would be able to choose one pension pot to pay into across your entire career. While this is still being considered, it appears more consultations are going to take place before this concept moves any further ahead. 

What hasn’t changed?

You may have read reports of certain changes that were predicted to happen. A few points that were rumoured but have not been announced are:

• Income tax reduction: there was talk of a potential reduction to income tax rates along with the reductions in National Insurance, but this hasn’t surfaced.
• Personal allowance increase: it was thought that the current standard personal allowance (the amount you can earn before being taxed on income) of £12,570 might be increased, but this also didn’t happen.
• Changes to Lifetime ISAs: there were expectations that Lifetime ISAs might see reform, either by increasing the age threshold for opening/paying into one, or by increasing the maximum property price you can use a LISA to buy. However, no changes to LISAs were made.

So, what happens next?

The announcements made at the Spring Budget will impact households in various ways. Some changes, like cuts to National Insurance and increase in the threshold for paying a charge on Child Benefit, will have more of an immediate affect from April 2024. Meanwhile, other announcements where consultations are required, like the new UK ISA or a tax on vaping products, are ones to look out for in the coming months.

If you want to get into the detail, you can read the Government’s full Spring Budget report.

Unless otherwise stated, all statements in our article are taken from the Spring Budget announcement on 6 March 2024, and are accurate at time of writing. 

Tax treatment depends on individual circumstances and taxation levels which may change. This information is based on our understanding of current taxation law and HMRC practice, which may also change.