Jeremy Hunt, Britain's Chancellor of the Exchequer, has presented the Budget for his economic strategy - here are the key takeaways.
ADVERTISEMENTJeremy Hunt delivered his Spring Budget to Members of Parliament in the House of Commons in London on Wednesday afternoon.
Against a difficult economic backdrop, the announcement was devoid of major giveaways, with the Chancellor erring on the side of fiscal prudence.
Cut to national insurance
Hunt has committed to cutting National Insurance contributions by 2p from April, a measure that will affect 27 million workers.
This follows an identical cut seen in November's Autumn Statement and is part of a Conservative plan to "truly make work pay".
Compared to last year's rate of 12%, it means that earners will pay 8% of their taxable salary in contributions.
The two reductions taken together mean that the average worker will save £900 a year.
While a cut to National Insurance contributions was predicted, many were instead hoping for a reduction in income tax.
A reduction in income tax would have been more expensive, although it would have benefited pensioners as well as workers - a group that makes up an important part of the Conservative voter base.
"While tax cuts are welcome relief to the pay packets of many … the tax burden in the UK remains so high and is on course to only climb higher," said Glenn Collins, Head of Engagement at the Association of Chartered Certified Accountants.
"Cuts now will only have a minimal effect on the overall issues of the cost of living crisis," he added.
Child benefit earnings threshold
From this April, the earnings threshold for child benefit will be raised from £50,000 to £60,000.
At the moment, the money given to support parents incurs a charge when one parent earns over £50,000 a year.
If one salary then reaches £60,000 or more, child benefit is withdrawn completely, even in the case of single-income households.
The scheme has been criticised for its unfairness, as two parents earning £49,000 a year are each able to receive child benefit in full.
Addressing this, Hunt said the government would "consult on moving the high-income child benefit charge to a household-based system to be introduced by April 2026".
As well as raising the lower threshold, Hunt also promised that child benefit would only be withdrawn completely when one parent earns £80,000 or more.
Windfall tax on oil and gas firms
A windfall tax on oil and gas firms, originally introduced in May 2022, has been extended by one year.
The 35% charge on profits was used to support consumers during the cost of living crisis, at a time when energy prices jumped after Russia's invasion of Ukraine.
ADVERTISEMENTThe tax was due to be abolished in March 2028, but this expiry date will now be postponed to 2029.
"Because the increase in energy prices caused by the Ukraine war is expected to last longer, so too will the sector's windfall profits," said Hunt on Wednesday.
The extension is expected to give the Treasury an extra £1.5 billion, he added.
Non-domiciled tax reform
Adopting a policy also proposed by the Labour Party, Hunt plans to abolish non-dom tax status, which will change the way residents avoid tax on overseas income.
Citizens who live in the UK but don't consider it their permanent home currently only pay tax to the Treasury on UK earnings, not on money earned elsewhere.
ADVERTISEMENTScrapping this scheme could raise an extra £3.6 billion a year.
For the first four years of residency, Hunt nonetheless added that new arrivals would still be exempt from tax on foreign income.
Other key takeaways
Another notable point in Hunt's Budget is that he has decided to extend a freeze on alcohol duty until February next year, a win for pubs and drinkers.
It’s also worth mentioning the launch of a new British ISA, a rise in the VAT threshold for small businesses, and a reduction in capital gains tax.
In positive news for drivers, a 5p cut on fuel duty will also be extended, a policy estimated to cost around £5 billion a year.
ADVERTISEMENTWhile commentators are still digesting Hunt's plans, the general mood is downbeat.
"There were no big announcements not already trailed", political economist Richard Murphy told Euronews Business.
"Hunt seemed like a Chancellor who knew his time was up… this was a Budget in need of an election to give it any meaning."
It's not yet known when voters will be called to the polls. Some pundits have suggested a General Election might be called as early as May, while others remain doubtful. One must be held by the end of January 2025 at the latest.
