Chancellor Jeremy Hunt presented the final planned Budget before the upcoming General Election, emphasising it as a “Budget for long-term growth.”
Key measures include a 2p reduction in National Insurance, the replacement of the non-dom tax regime, and a new £5,000 UK ISA tax allowance.
Child benefits were extended, and partial benefits introduced for higher-earning households.
Changes in taxation, benefits, and income support were complemented by adjustments in alcohol duties, the introduction of a vaping tax, and the extension of the fuel duty freeze.
The budget also addressed housing, public debt, inflation, and economic growth predictions.
Notable business and investment adjustments involved VAT registration threshold increase, extension of small business loan schemes, and permanent tax reliefs for touring productions.
Various additional measures include a memorial fund, tax credit for independent films, and investments in green energy projects.
Taxation:
1. Reduction in National Insurance:
– A notable adjustment in the Budget involves a 2p reduction in National Insurance, a payroll tax applicable to both employees and the self-employed. This reduction aims to alleviate financial burdens for workers and businesses.
2. Non-Dom Tax Regime Replacement:
– The Budget introduces a significant change for UK residents with permanent homes overseas. The current non-dom tax regime will be replaced by new rules effective from April 2025. This shift signifies a reform in how tax is applied to individuals with enduring connections to the UK but residing abroad.
3. UK ISA Tax Allowance:
– A new initiative includes the introduction of a £5,000 UK Individual Savings Account (ISA) tax allowance. This allowance is specifically designed for savers investing in “UK-focused” shares. The implementation of this allowance follows a consultation process, indicating a thoughtful and consultative approach to this tax measure.
Transport and Energy:
1. Fuel Duty Freeze Extension:
– The freeze on fuel duty is extended, maintaining the 5p cut in fuel duty on petrol and diesel for another year. This decision aims to provide continued relief to consumers and businesses by keeping fuel prices stable.
2. Wylfa Nuclear Site Acquisition:
– A significant development involves a £160 million deal for the UK government to acquire the site of the planned Wylfa nuclear site in north Wales. This strategic move reflects the government’s commitment to nuclear energy and its potential role in the country’s energy landscape.
3. Windfall Tax Extension:
– The Budget extends the “windfall” tax on energy firms’ profits until 2029. This extension suggests an ongoing effort to ensure a fair distribution of profits within the energy sector, contributing to broader economic stability.
4. Air Passenger Duty Increase:
– A change in air travel taxation includes an increase in air passenger duty specifically for business class tickets. This adjustment may be aimed at addressing environmental concerns associated with premium air travel and generating additional revenue.
5. Green Energy Fund Allocation:
– The Budget allocates an additional £120 million for a government fund dedicated to investing in green energy projects. This financial commitment underscores the government’s focus on sustainability and renewable energy, aligning with broader environmental goals.
Business and Investment:
- Increase in the threshold at which small businesses must register to pay VAT from £85,000 to £90,000 starting in April.
- Extension of the Covid-era government loan scheme for small businesses until March 2026.
- Permanent establishment of tax reliefs for touring and orchestral productions, originally scheduled to end in March 2025.