In the spring budget delivered to parliament by chancellor Jeremy Hunt earlier today, he revealed several key policies focused on growing the economy as much as possible, after it was confirmed that the country entered recession at the end of 2023.
A second round of cuts to national insurance, reported in The Times yesterday, were confirmed by the chancellor this afternoon. Rumoured changes to income tax were not part of the chancellor’s plans on this occasion.
A round of other changes were also announced, including a freeze in fuel duty, a tax on vapes, plus changes to ISAs, child benefit, holiday lets and more.
Here, we break down all of the major changes unveiled as part of the 2024 spring budget that will affect your finances.
In this article:
- National insurance cut for the second time in a year
- Fuel duty freeze extended
- Changes to child benefit will come into effect
- Landlords that rent out second homes to tourists will no longer benefit from tax breaks
- Alcohol duty frozen until 2025
- A duty on vapes will be introduced from October 2026, while tobacco duty will also rise simultaneously
- A new “British ISA” will be launched, boosting your total ISA allowance by £5,000
Read more: National insurance cut 2024: The 2p tax change explained
National insurance cut for the second time in a year
From April 6, the rate of national insurance will be cut by two percentage points. This means that 27 million British workers will be paying just 8% of their earnings towards national insurance, rather than the current rate of 10%. If you think you’re having déjà vu, you’re not wrong; the chancellor made the same cut to national insurance as part of his autumn statement in November 2023, which began to take effect in January.
This means that since 2023, the national insurance rate will have fallen from 12% to 8%. This represents annual savings worth a total of £900 for the average worker earning £35,400, according to the Treasury. The latest cut to national insurance will be worth an average of £450 a year.
There are still national insurance changes set to take effect that were announced in November; from April, around two million self-employed people will benefit from class 2 national insurance being scrapped, which will save them £192 a year. Furthermore, a decrease in class 4 national insurance from 9% to 6% on all profits made between £12,570 and £50,270 will save them approximately £1,050 annually. The rate remains at 2% on profits over £50,270.
Find out more about national insurance, including the latest cuts. Plus, find out how much your take-home pay will increase by using our tax calculator.
Fuel duty freeze extended
Every time you pay at a petrol or diesel pump, fuel duty is levied on your purchase. It’s currently charged at a rate of 52.95 pence per litre of petrol or diesel. This rate has been frozen since 2011, and this freeze was last extended by a year in March 2023. In a move that will relieve motorists, Hunt has frozen fuel duty yet again, until March 2025. This decision has cost the Treasury about £5 billion.
The fuel duty freeze will save the average driver £50 over the course of the next year.
Changes to child benefit will come into effect
The chancellor has announced that the £50,000 threshold at which claimants begin to lose their child benefit will rise to £60,000. This will be particularly good news for households with children that have seen their salaries rise above the threshold to keep in line with inflation. Furthermore, the earnings threshold at which child benefit will be removed completely will rise from £60,000 to £80,000. This means that for each £100 parents earn over the new £60,000 threshold, they will only need to repay 0.5% of the child benefit they receive, rather than the current level of 1%.
Half a million families with children are set to save an average of £1,300 next year because of the changes, the chancellor said.
Currently, when a parent receiving child benefit begins to earn £50,000 or more, the amount of the benefit they get starts to reduce. For each £100 that parents earn over the £50,000 threshold, they must repay 1% of the child benefit they receive. By the time they earn £60,000, they have foregone all of the child benefit.
The chancellor also announced a broader overhaul of the child benefit system. From 2026, the amount of child benefit you earn or must repay will depend on a total household income rather than individual income.
This is designed to render the system fairer for households where one member earns above the childcare reduction threshold, and another earns well below it, meaning they currently lose their child benefit entirely.
Read more: What is the high-income child benefit charge?
Landlords that rent out second homes to tourists will no longer benefit from tax breaks
The chancellor has announced that the furnished holiday lets (FHL) scheme will be abolished.
Currently, landlords renting out a second home to tourists can benefit from FHL. This lets them deduct the value of their mortgage payments from the amount they make from rent, and also means they don’t pay as much capital gains tax when they decide to sell the property.
It is estimated that the Treasury will raise £300 million with this move, which will help them fund some of the other policies in the budget, such as the 2p cut to national insurance.
In the spring budget, the chancellor said that abolishing FHL benefits ceasing will also help to mitigate the housing crisis that has arisen in UK holiday destinations such as Cornwall and Devon. This is because many landlords have bought up housing stock in order to take advantage of the tax benefits.
Alcohol duty frozen until 2025
The chancellor has confirmed that the alcohol duty freeze will be extended until 1 February 2025.
As part of last year’s spring budget, the government cut alcohol duty, saving an average of 68p per bottle of wine. As part of the autumn statement, the chancellor announced that the current level of fuel duty would be frozen until August 2024.
A tax on vapes will be introduced from October 2026, while tobacco duty will also rise simultaneously
The chancellor acknowledged that vapes aid people in quitting smoking. While he announced that a tax on vapes will be introduced from October 2026, he declared plans to hike tobacco duty simultaneously, so that people are still incentivised to quit smoking.
Read more: What the spring budget means for alcohol and tobacco
A new “British ISA” will be launched, boosting your total ISA allowance by £5,000
The chancellor has announced that a new British ISA is set for launch, which will enable you to invest in UK assets and pay no tax on the returns you make. You’ll be able to save up to £5,000 per tax year in the British ISA, which will be on top of the current £20,000 annual ISA allowance. This means you’ll be able to save up to £25,000 in ISAs each tax year in total.
Find out more about how ISAs work.
Capital gains tax on property will fall from 28% to 24% for higher-rate taxpayers
Currently, higher-rate taxpayers that sell a property are liable to pay 28% of profits above the £6,000 threshold in capital gains tax. The chancellor announced that this amount will fall from 28% to 24% from April 6. The threshold, however, is also set to fall to £3,000 in the new tax year.
Find out more about how capital gains tax works, including the tax-free thresholds you’ll benefit from.
Important information
Some of the products promoted are from our affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
