0~R54 CFThe 2024 Spring Budget is fast approaching, and the financial presses are awash with rumours over what changes will be announced, from tax cuts to funding extensions to changes in loan parameters. With 2024 being an election year, the press and the public alike are acutely aware that both Chancellor Jeremy Hunt and Prime Minister Rishi Sunak will be wanting to make changes that could get the Conservative Party more votes.
The eyes of Caroola’s accounting team will be glued to their TV screens, as we are keen to find out what changes could be coming in and affecting the financial health of our clients and customers. In the meantime, we wanted to explore some of the biggest speculations to date.
Tax Cut Rumours
Rumour 1: Further Cuts to Income Tax
In the 2023 Autumn statement, Jeremy Hunt announced changes to National Insurance that have resulted in savings of £450/year for the average Pay-as-You-Earn worker. Now, rumour has it that more income-dependent tax cuts may be on the way, either in the form of further NI cuts (saving a £35,000/year earner £673/year) or 2p being shaved off income tax rates (saving a £35,000/year earner £448/year). Hunt has been downplaying any rumours of significant tax giveaways, saying that any cuts made need to be ‘strategic’ and ‘smart’, but he has not ruled out these changes happening, either.
Rumour 2: Inheritance Tax Cut or Abolished
A reduction or complete removal of inheritance tax has been speculated in the lead up to almost every budget in recent years, and now is no exception. Currently, up to £325,000 can be left, tax-free, to beneficiaries of an estate, and any further inheritance is taxed at 40%. While Jeremy Hunt is not a fan of the inheritance tax, Rishi Sunak is apparently moving away from making cuts to it, as the tax only applies to 4% of all estates in the United Kingdom, and making cuts to it could add fuel to Labour’s argument that the Tories only look after the wealthy.
Rumour 3: Stamp Duty Cuts
In September 2022, there was a temporary cut made to stamp duty that stated none needed to be paid on the first £250,000 of any home purchase, or on the first £450,000 of any first-time buyer’s home purchase. With the cost-of-living crisis continuing to rear its ugly head, there is now a call to either make these changes permanent or, more ideally, raise the current thresholds even further.
Council and Household Assistance Rumours
Rumour 4: More Council Funding
One in five leaders of local councils in England have stated that they are likely to declare bankruptcy in the next fifteen months if they don’t receive assistance before then. £1.6 billion is needed to take care of the funding deficits, and Michael Gove has stated that councils will receive an extra £600 million in funding, resulting in a core spending power increase of £4.5 billion. However, according to the Guardian, almost half of that £4.5 billion figure assumes that every council in England will raise council tax in April as much as they are able, which will add £100 to a typical Band D council tax bill.
Rumour 5: Household Support Funding Extension
Household support funding was originally launched in October 2021 to help struggling residents get through the winter months. Although this was meant to be a temporary measure, it has been extended four times since its inception, and is now set to end on 31st March 2024. Councils around the country have urged the government to extend the scheme again, as the cost-of-living crisis has resulted in people needing more help from their local councils than ever.
Rumour 6: Child Benefit Payback Changes
It has been reported that Hunt is considering raising the £50,000 single salary threshold at which claimants of child benefits must start paying back a percentage of the benefit claimed, as well as the £60,000 single salary threshold at which all child benefit must be paid back. As inflation has risen dramatically in the past few years and many households have seen their income rise above the threshold, this could be widely beneficial to families with children struggling financially.
Business Balancing Rumours
Rumour 7: Banning Mid-Contract Broadband Price Rises
Hunt may decide to ban mid-contract broadband and mobile price hikes. BT, Three, TalkTalk and Vodafone have confirmed their prices will be rising by approximately 8% in April. A ban on increasing prices mid-contract will mean customers won’t have to deal with unpredictable inflation-linked price rises on some of their most essential services.
Rumour 8: Fuel Duty Freeze
In another effort to ease the cost-of-living burden on UK residents, one suggestion that has been gaining traction is freezing fuel duty. This added tax on petrol prices is a major source of revenue for the UK government, and it has historically risen with inflation. Fuel prices are a monthly cost that UK residents feel particularly acutely, however, so any promise of a price freeze is likely to be very much welcomed.
Helping Out Younger People Rumours
Rumour 9: Lifetime ISA Overhaul
The Lifetime ISA (LISA) was introduced in 2016 to help young people in the UK save up for their first home. 18-39 year-olds can currently save up to £4000/year in a LISA, and the government adds 25% on top of what they save. This money can only be withdrawn for a deposit on a house worth up to £450,000, or when the LISA owner retires as part of a pension pot. Since the LISA was introduced, house prices have increased by 29%, making fewer houses available for purchase with LISA funds. The Chancellor appears open to increasing the maximum property value for LISA withdrawals.
Rumour 10: 99% Mortgages
According to the Independent, the government is considering introducing a scheme where young people can get on the UK property ladder with a 1% deposit – a progression of the previous help-to-buy scheme, which allowed first time buyers to purchase new build developments with 5% deposits. This scheme appears popular among MPs on both sides of the political spectrum, but there are housing experts who worry that it could push house prices up even higher.
The spring budget will be televised on Wednesday 6th March at 12:30, and we’ll be doing live updates over on the Caroola LinkedIn page, so be sure to tune in. In the meantime, take a look at all our social media channels for further budget-related news and insight.
