Pre-Budget Commentary

29 February 2024

In the upcoming Spring Budget on 6th March, Chancellor Jeremy Hunt is expected to unveil a strategy focused on tax cuts, predominantly targeting personal taxes to cultivate a positive atmosphere prior to a General Election, expected later this year.

With the aim of reigniting short-term economic growth following the recent technical recession, the Budget is likely to introduce incentives designed to sway voters.

The Tories will likely use this event as a final pre-election platform to pitch their continued role in government, however they will face scrutiny regarding fiscal headroom amidst economic challenges. International warnings from the International Monetary Fund (“IMF”) against extensive tax cuts add a layer of caution, while the Institute for Fiscal Studies (“IFS”) suggests the potential need for future tax cut reversals for economic sustainability.

Rumoured Budget announcements include:

• A 1% or 2% cut in the basic rate of income tax
• Cost of a 1% reduction on the basic income tax rate is £6bn (source: gov.uk)
• Increase to personal allowances
• Increase to personal tax thresholds - currently frozen until 2028
• Reductions in National Insurance contributions
• Abolition or reduction of inheritance tax
• Adjustments to the High Income Child Benefit charge threshold
• Increase to the ISA limit
• Policy changes in the residential housing market
• National Insurance Contributions (“NIC”) relief for employers hiring from within targeted populations
• Reviewing the current £85k VAT registration threshold for businesses
• Potential reforms to child benefits and initiatives to support first-time homebuyers
• A proposed levy on vaping products which, if implemented, would be imposed on imports and vape manufacturers (intended to render the habit financially prohibitive for children)
• A potential 5p increase on the fuel duty, which has remained unchanged since 2011
• Enhanced financial support for students through an increase in maintenance loans.

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Important information

The content provided above is for information only and should not be regarded as investment advice. Professional guidance should be undertaken before engaging in any investment activity. References to tax implications and legislation are correct as at Feb 2024 but are subject to change and will be dependent on your personal circumstances. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Registered Office: Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England number 4774117. Member of Walker Crips Group plc.