Chancellor Jeremy Hunt has revealed the details of this year’s Budget during his address in the House of Commons.
This marks the final planned Budget before the upcoming general election, anticipated to occur later this year.
Mr Hunt was reportedly considering a cut to income tax but avoided one. Tax cuts will be paid for through a mix of tax increases including on business class airfares, vapes, tobacco, and on owners of short-term holiday lets.
Here’s a summary:
Taxes and income
- A reduction of 2p per pound in National Insurance, a payroll tax, applicable to both employees and the self-employed.
- Replacement of the non-dom tax regime, which applies to UK residents with a permanent home overseas, with new regulations effective from April 2025.
- Introduction of a £5,000 tax allowance under the “British ISA” scheme, enabling individual savers to invest in UK-listed companies.
- Extension of the repayment period for individuals receiving benefits who take out emergency budgeting loans from the government.
- Elimination of the £90 fee for obtaining a debt relief order.
- Continuation of the government fund aimed at assisting individuals facing challenges with the cost of living pressures for an additional six months.
Transport
- Fuel duty frozen again, with the 5p cut in fuel duty on petrol and diesel, due to end later this month, kept for another year.
- Air passenger duty, the tax paid on flights, to go up for business class tickets.
Energy
- £160m deal for UK government to purchase site of planned Wylfa nuclear site in North Wales.
- “Windfall” tax on the profits of energy firms, which had been scheduled to end in March 2028, extended until 2029.
Cigarettes and alcohol
- The freeze on alcohol duty, originally set to conclude in August, will now persist until February 2025.
- A fresh tax on vaping products is scheduled to commence in October 2026, subsequent to a consultation process.
- Current tax on tobacco will undergo an increment to uphold the “financial encouragement towards opting for vaping instead of smoking.
Property
- Instead of relief from stamp duty, the government promised to abolish stamp duty relief.
- Multiple Dwellings Relief, which was introduced to those buying more than one house in a single transaction, has been removed.
More measures
- High Income Child Benefit Charge to be assessed on a household-basis by April 2026, and immediate support for working families by increasing the threshold to £60,000 and halving the rate at which Child Benefit is repaid – representing a £1,260 boost on average for around half a million working families.
- The NHS will receive an additional £3.4 billion as part of this to invest in new tech and digital transformation, including making the NHS app a single front door for patients, piloting new AI to halve form-filling times for doctors, rolling out universal electronic patient records, and over one hundred upgraded AI-fitted scanners so doctors can read MRI scans more accurately and quickly.
- Threshold at which small businesses must register to pay VAT raised from £85,000 to £90,000 from April.
- £1m for a memorial to honour Muslims who fought for Britain during World War One and Two.
Reaction
Sir Keir Starmer has blasted Jeremy Hunt’s Budget as the “last desperate act” of a dying government.
Following the chancellor’s speech, Starmer referred to Hunt and PM Rishi Sunak as the “Chuckle Brothers of decline”.
The Labour leader added that the country was stuck in a “downward spiral” of chaos and demanded the prime minister confirms May 2 as the date for the next general election.
Mayor of Greater Manchester, Andy Burnham, said: “The chancellor deserves some credit for extending the Household Support Fund in today’s Budget. As Metro Mayors we joined more than 170 councils in calling for an extension to the Fund, which has been a lifeline for thousands of people in Greater Manchester during the cost-of-living crisis.
“There were also further positive announcements on devolution, with a trailblazer deal for the North East and steps towards devolution in regions in the South.
“But this Budget failed to acknowledge or address the national emergency in the state of local government finances. Instead, the chancellor chose tax cuts that will ultimately be paid for by further drastic cuts to public services. The consequences are severe – for communities both in Greater Manchester and across the UK – and our most vulnerable residents will be hardest hit.”
Read more
Mike Thompson, chief operating officer at Leasing Options said: “The extension of the fuel duty freeze is a positive development for motorists, the motoring industry, and the broader economy. We welcome this decision and look forward to continuing to support our customers with flexible leasing options.”
Roger Mortlock, CEO of CPRE, said: “The government’s plan to scrap tax breaks for short-term lets is a step in the right direction. But these changes should be applied to all second homes – a major cause of the rural housing affordability crisis. Air-BnB-style short-term lets have led to ghost towns and villages in some parts of the country, driving people out of the communities that depend on them. A secure and healthy home is a foundation for a decent life and one that many people in rural communities are being denied.
“Much more is needed to fix a crisis that is tearing the soul out of rural communities. We call on the government to redefine ‘affordable’ in line with local incomes, not market rates, set and deliver ambitious targets for new, genuinely affordable and social-rent rural housing, and urgently bring forward its new regulations on short-term lets.”
Daniel Burton, CEO of Wondrwall, said: “Hunt’s spotlight on AI and energy is a surge in the right direction, but the sector needs greater reassurance on the longer-term plan on connecting renewables to the grid. For now, more cash for green energy production, noting the £120m of extra funding to the Green Industries Growth Accelerator to build supply chains for new technology such as offshore wind and carbon capture, is a good thing. Though Hunt gave a nod to a faster connections process by January 2025, an upcoming general election and lack of needed detail could potentially unplug efforts rapidly.”
