Winners and Losers Expected in the Spring 2024 Budget

On Wednesday, March 6th, the Chancellor, Jeremy Hunt, will deliver his fourth fiscal event at the Spring Budget, possibly marking the final fiscal event of this Parliament, which is due to end by January 2025.

Hunt finds himself in a challenging position – constrained by the handcuffs imposed by the Office of Budget Responsibility (OBR), limiting his fiscal headroom to less than £11 billion. This amount is unlikely to suffice for the usual pre-election tax giveaways.

Already, £20 billion has been allocated to tax cuts in the previous Autumn Statement. £10 billion was directed towards a 2% reduction in National Insurance, effective January 2024, with an additional £10 billion earmarked for Small and Medium-sized Enterprises (SMEs) in the form of Corporation Tax relief through “full expensing.”

So, what can we anticipate from Hunt when he stands up at the Dispatch Box next week? One certainty is that he won’t acknowledge the current Parliament as the largest tax-raising one in modern history. Here’s what you can expect, given his government’s stretched overdraft:

Here’s our Tax Director, Nigel Shaw’s betting forecast. You can also catch Nigel’s update and commentary, in person, at our Breakfast Seminar on Tuesday, March 12th, at Woodsome Hall Golf Club. Register here.

Prediction 1 – Even Odds

It costs over £7 billion to reduce the basic rate of tax by 1p (currently 20%). Instead, I anticipate a further 1p reduction in National Insurance rates, costing £5 billion. This move would primarily benefit lower-paid workers, aligning with the government’s aim to increase employment.

Prediction 2 – Odds of 2-1

To emulate political opponents, Hunt may adopt their sole idea on tax hikes by abolishing tax reliefs for “Non-doms” or increasing annual tax contributions for long-term UK residents. This move could fund a reduction in Stamp Duty Land Tax (SDLT).

Prediction 3 – Odds of 5-1

Hunt might introduce reduced rates of SDLT to stimulate the housing market, akin to measures taken during the COVID-19 pandemic. Watch out for the reintroduction of a zero rate for high-value property purchases.

Prediction 4 – Odds of 10-1

Considering the freeze on Personal Tax allowances initiated by Rishi Sunak in the 2021/22 tax year, I predict an increase in the allowance for the 2024/25 tax year. This adjustment aims to prevent relatively low-income taxpayers from being dragged into the Self-Assessment tax system.

Prediction 5 – Odds of 100-1

Expect a surprise announcement from Hunt, perhaps closing tax loopholes for “Non-doms,” emboldening him to propose the abolition of Inheritance Tax. This bold move could differentiate his party from the opposition, though it may draw accusations of favouring the wealthy.

For further inquiries, contact Nigel Shaw at nigel.shaw@langricks.com.