Yahoo Finance What has been announced in the spring budget?
Jeremy Hunt has delivered his spring budget and, with a UK general election fast approaching, the chancellor announced a raft of tax cuts.
Another national insurance cut, fuel duty freeze and a change to child benefit have all been confirmed.
Here's a look at the biggest changes from the spring budget.
National insurance cut
The national insurance move will cost move £10bn, and when combined with the 2p cut announced in November last year, which took effect in January, the latest move will save the average worker a combined £900.
National insurance is being cut for employees from 10% to 8%, and for the self-employed it will drop from 8% to 6%.
Read more: What a 2p national insurance cut means for your finances
"It means an additional £450 a year for the average employee or £350 for someone self-employed," Hunt said. "When combined with the autumn reductions, it means 27 million employees will get an average tax cut of £900 a year and 2 million self-employed a tax cut averaging £650. Changes that make our system simpler and fairer. And changes that grow our economy by rewarding work."
Stamp duty
Stamp duty relief for people buying more than one dwelling is being abolished due to the fact that it was being regularly abused, Hunt said.
"I have also been looking at the stamp duty relief for people who purchase more than one dwelling in a single transaction, known as Multiple Dwellings Relief.
"[It was] intended to support investment in the private rented sector. However, an external evaluation found no strong evidence that it had done so and that it was being regularly abused. So I am going to abolish it," Hunt said.
Vape duty
Vapes and e-liquids are set to incur higher taxes in the UK, according to measures rolled out in the spring budget on Wednesday, alongside a public consultation on their use.
The move, Jeremy Hunt said in Parliament, aims to "discourage non-smokers from vaping" and is set to take hold in October 2026.
Read more: Tax on vapes and tobacco to ramp up as alcohol duty frozen in budget
Hunt also rolled out a one-off increase to tobacco duty to "maintain the financial incentive to choose vaping over smoking."
Fuel duty cut
Jeremy Hunt has extended the 5p cut in fuel duty for another year at a cost of £5bn, making the 14th year in a row that it remains the same.
The 5p per litre cut was set to run out in March 2024 and if it were not extended, fuel duty would be set to return to its frozen rate of 57.95p per litre.
"[The fuel duty cut] will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250," Hunt said.
New British ISA
A brand new British ISA has been announced to encourage more people to invest in UK assets.
This will allow an additional £5,000 annual investment on top of the existing £20,000 ISA allowance.
Investing expert at the personal finance comparison site, Matt Mckenna, said:"The big question about the British ISA was whether it would eat into the existing £20,000 annual allowance or be added as an extra on top. The fact that the chancellor has given an additional £5,000 to accommodate this is a sensible move and I respect the ambition of a British ISA.
Read more: What the budget means for you
"In my opinion, it is reasonable for the British government to try and stimulate growth in its domestic market and this ensures UK investors won’t have to curb their current foreign investment plans.
"What is important is that investors are aware of the recent underperformance of the FTSE when compared to a lot of other global markets. However, this is already a dilemma for investors — adding extra allowance simply gives them another opportunity to invest that they don’t need to take if they don’t wish to".
Child benefit reform
Hunt upped the threshold at which earners are no longer eligible for child benefits in his spring budget, increasing the cap by £10,000 and laying out a path to change the way it is assessed.
The high income child benefit charge (HICBC) is a tax charge that applies to higher earners who receive child benefit, or whose partner receives it.
Read more: What is non-dom status and why has Hunt scrapped it?
Under current policies, child benefit is withdrawn when one parent earns more than £50,000 a year. From this April the high-income child benefit charge threshold will be raised to £60,000.
He also committed to consulting on moving the high-income child benefit charge to a household-based system to be introduced by April 2026.
‘Non-dom’ tax rules
Hunt announced that non-dom status will be scrapped in a bid to raise £2.7bn a year.
Speaking in the Commons, Hunt said: "The government will abolish current tax system for non-doms, get rid of the outdated concept of domicile. We will replace the non-dom regime with a modern, simpler and fairer residency."
Currently, people with non-dom status are able to earn money from abroad without having to pay UK tax (provided they have not lived in the UK for more than 15 of the past 20 years).
The chancellor announced on Wednesday that this would change so that those who arrive to the UK from 2025 will be exempt from UK tax for just four years — with a two-year transition period for those who currently have non-dom status.
Airfare duty
Hunt said air passenger duty charged on non-economy airfares — or business class tickets — will be increased to account for inflation.
Read more: Budget 2024 LIVE: Hunt cuts national insurance by 2p and freezes alcohol duty
The rate for economy travellers will remain frozen. Overall the Treasury forecasts the change will raise £500m in the next five years.
Household support fund extended
The household support fund, which allows local councils to help families via food banks, warm spaces and food vouchers, will be extended beyond 31 March, the chancellor has said.
It will continue for another six months.
Holiday lets
Hunt also abolished tax perks for landlords who rent out their properties to short-term holidaymakers rather than long-term tenants.
Currently, landlords can qualify for tax breaks if they make the property available for at least 210 days a year and let it out for at least 105 days a year
From April 2025, he said relief for furnished holiday lets would end.
Data from the Office for National Statistics shows that nearly 2.8 million stays in short-term lets were booked in July-September last year, through Airbnb (ABNB), Booking.com and Expedia Group (EXPE), or almost 29 million "guest nights".
Inheritance tax
Inheritance tax (IHT) is currently paid by fewer than 4% of estates but high house prices and frozen IHT thresholds mean more people are predicted to fall into the net. However, a cut in inheritance tax would benefit better-off families.
However, despite expectations, the chancellor did not announce any changes to that threshold to reflect rising house prices. Abolishing it altogether would cost £7bn, according to the IFS.
Watch: UK govt woos voters with more pre-election tax cuts
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