Uncover the latest economic insights and key financial decisions announced in the March Spring Budget 2024 to provide better-informed advice to your clients.
The March Spring budget 2024 targeted individual taxation, savings, and specific sectoral incentives to drive growth and address key financial challenges
A major element of the budget was a further reduction in Class 1 Primary National Insurance Contributions for employees.
Changes to tax relief benefits in various areas both negatively and positively impacted citizens’ capacity for savings and tax situations.
Staying abreast of the latest financial trends and developments is crucial as a financial adviser. In the UK, the Spring Budget has a major impact on citizens and can greatly impact their financial situation. Understanding how budget changes affect your clients will help you provide solid financial advice that helps them meet their goals.
The Spring Budget 2024 changes will affect everyone, but before we dive into the March Spring Budget 2024, let’s take stock of the impact of last year’s Spring Budget.
In its attempts to address key challenges, including a rising cost of living, the Spring Budget 2023 had a significant impact on the UK economy. The budget aimed to boost economic growth, reduce government debt, and tackle issues like stagnant productivity and regional inequalities.
Despite some concerns about the funding levels and effectiveness of certain initiatives, the budget generally aimed to maintain financial market confidence while aligning with growth priorities set by the Prime Minister.
The impact of the UK Spring Budget was seen in improved economic outlooks, reduced inflation, increased real wages, and forecasts for growth in GDP.
The UK March Spring Budget 2024 announced a number of critical tax changes aimed at individuals and businesses.
Some of the notable tax updates included:
Scrapping of tax relief on furnished holiday rentals: Effective April 2025, this will affect those with holiday let mortgages who can currently deduct expenses like mortgage interest payments to lower their tax liability.
Capital gains tax relief: The higher rate of capital gains tax on selling residential property will be reduced from 28% to 24%.
Changes in taxation for non-domiciled individuals (individuals domiciled outside the UK)
Abolishment of stamp duty land tax multiple dwellings relief: Effective from 1 June 2024.
Increase in VAT registration threshold: The VAT registration threshold was raised from £85,000 to £90,000, starting from 1 April, 2024.
Maintenance of corporation tax rate: The main corporation tax rate remained at 25%, with additional changes related to corporation tax reliefs for the film and cultural sectors.
The changes announced in the UK March Spring Budget 2024 that could affect savings include:
Reduction in national insurance contributions: The main rate of Class 1 Primary National Insurance Contributions for employees will drop a further 2% to 8% from 6 April, 2024. Most employed earners should benefit from this measure, enabling them to save up to £750 annually (for higher earners).
Child benefit reform: The minimum threshold when child benefit begins to be lost will rise to £60,000, and the upper threshold, beyond which the benefit is withdrawn altogether, will rise to £80,000. This will aim to support families and potentially positively impact savings.
Tax relief changes: The scrapping of tax relief on let-out furnished properties will decrease affected individuals' savings capacity. However, reducing capital gains tax on the sale of residential property and abolishing stamp duty land tax on multiple dwellings will enable impacted citizens to accrue greater savings.
The UK Spring Budget 2024 had several effects on pensions. These include changes to National Insurance Contributions (NIC) and reforms related to pension schemes, which may reinforce the new dawn for retirement planning that has been emerging for some time now.
Some notable impacts on pensions from the budget are:
Reduction in employee national insurance contributions: This reduction could potentially impact pension contributions favourably.
Value for money in Defined Contribution (DC) funds: A proposed new framework for DC schemes, including proposals for public disclosure of asset allocations and performance comparisons with other schemes, may improve long-term outcomes for all DC schemes.
Child benefit reform: Changes allowing individuals to earn up to £60,000 a year before offsetting begins, with the rate of offsetting halved, could benefit families and potentially influence pension planning.
Lifetime Provider model: The government expressed continued interest in exploring a "lifetime provider" model for DC pensions, aiming to improve outcomes for savers.
The UK Spring Budgets for 2023 and 2024 differ in a number of areas:
2024: Aimed to deliver lower taxes, more investment, and better public services, with a focus on individual taxation rather than businesses.
2023: Support for businesses and households, investments in infrastructure, and initiatives to increase workforce participation.
2024: Reduction in Employee National Insurance contributions, changes in taxation for non-domiciled individuals, and adjustments in VAT registration thresholds.
2023: Adjustments to pension contributions, changes in National Insurance Contributions, and reforms in various sectors.
2024: Reduction in NIC rates, changes in Child Benefit rules, and reforms in inheritance tax and stamp duty land tax.
2023: Improved economic outlooks, reduced inflation, increased real wages, and forecasts for GDP growth.
2024: Potential savings for employees, adjustments in tax relief, and changes in tax structures affecting savings and disposable incomes.
Overall, the Spring Budget 2023 focused on broader economic growth and productivity issues. The Spring Budget 2024, meanwhile, targeted individual taxation, savings, and specific sectoral incentives to drive growth and address key financial challenges amid continuing fears of a UK recession.
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