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What to expect in the Spring Budget 2024…

On 6th March 2024 at 12:30pm, Chancellor Jeremy Hunt is set to deliver a highly anticipated Spring Budget, marking one of the final major fiscal announcements before the country heads to the polls for the general election. This budget, coming on the heels of the UK’s recent entry into recession at the end of 2023, carries significant weight.

How will the Chancellor balance the books while aiming to win over voters? Will there be room for tax adjustments or spending increases to signal a strong economic turnaround?

This budget not only sets the stage for the government’s economic agenda but also serves as a critical touchpoint for businesses and individuals across the nation, keenly awaiting measures that could impact their financial planning and prospects.

Income Tax Adjustments

In the face of economic downturns, sweeping income tax cuts remain unlikely. However, adjustments to the freeze on personal allowance and the threshold at which higher rate income tax becomes payable, could offer targeted relief. Whilst freezing these thresholds has raised significant funds for the Chancellor, such measures would not only support taxpayers but could also stimulate consumer spending, providing a boost to the economy.

The question remains: how will these potential adjustments balance the need for fiscal prudence with the demand for economic stimulus?

Dividend and Capital Gains Tax (CGT)

The impending reductions in dividend allowance and CGT exemption have stirred concerns among investors and entrepreneurs alike. With the dividend allowance due to reduce by half to £500 and the CGT annual exemption due to halve to £3,000, maintaining these reductions could dampen investment enthusiasm, yet reversing the reduction might be perceived as indecisive. The Chancellor’s decision will signal the government’s stance on investment and growth versus fiscal conservatism.

Inheritance Tax (IHT) Reforms

Speculation about IHT reform has been rife, with potential changes ranging from abolishment altogether to increased allowances or rate reductions. Interim reforms to IHT reliefs and potentially an increase in the Nil Rate Band may be announced, offering some relief and potentially stimulating economic activity through wealth transfer. Such reforms could significantly impact estate planning and wealth transfer strategies, making it a closely watched area in the budget. It seems unlikely that the Chancellor will opt for a bold overhaul just before polling day, with increases to the existing thresholds and rate reductions being considered far more likely.

Lifetime ISA and Housing Initiatives

Enhancements to the Lifetime ISA could be beneficial for first-time homebuyers, aligning with the government’s housing affordability goals. Additionally, any new housing initiatives announced in the budget will be critical in addressing the UK’s housing challenges. The effectiveness of these measures in stimulating the housing market and supporting home ownership will be key.

Corporate Tax and Capital Allowances

With the corporate tax landscape recently undergoing significant changes, businesses seek stability and clarity. Further adjustments to capital allowances, particularly to support green investments, could incentivise sustainable growth. The Chancellor’s approach will reflect the government’s priorities between fostering business investment and managing fiscal resources.

VAT and SME Support

Raising the VAT registration threshold could alleviate some pressure on SMEs, encouraging growth and reducing administrative burdens. Additionally, VAT rate adjustments, especially for environmentally focused sectors, could underscore the government’s commitment to sustainability. These measures would reflect a balance between supporting small businesses and promoting green initiatives.

Child Benefit Adjustments

Anticipated adjustments in the Budget aim to correct imbalances in the child benefit scheme. Modifying the earnings threshold for individuals and implementing a cap based on household income could enhance the financial well-being of families. This would address the persistent discrepancy where a single earner household making around £65,000 might not qualify for the benefit, whereas a dual-earner household with each parent earning £49,999 could still claim the full entitlement.

The Chancellor is likely to be inclined towards quickly enacting reforms to the child benefit system to bolster family finances

Stay informed on the Spring Budget 2024 with BK Plus

With the Spring Budget announcement just around the corner, the air is thick with speculation and anticipation. This budget, set against the backdrop of a challenging economic period and just before a general election, is more than just a fiscal statement—it’s a roadmap for the UK’s immediate financial future.

We’re committed to providing comprehensive insights and analysis, so shortly after the announcements we will publish a detailed analysis and a quick-read article highlighting all you need to know, breaking down the complex jargon into actionable information. Stay tuned!

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