Here are our main takeaways from the UK Governments Spring Statement for 2024.
Tax Cuts and Incentives:
National Insurance Reduction: The 2% cut (from 10% to 8%) in National Insurance is expected to benefit low and middle-income earners the most. However, some economists argue it might not significantly stimulate the economy as people might save the extra income due to inflation concerns.
Impact on Businesses: While the National Insurance cut benefits businesses by lowering their payroll costs, the extension of the small business loan scheme until March 2026 offers crucial support for start-ups and recovery efforts. The VAT threshold increase might encourage small businesses to grow without immediate VAT registration burdens.
Inflation and Cost of Living:
Duty Freezes: Freezing fuel and alcohol duties directly helps consumers by maintaining current prices. However, the effectiveness in curbing inflation might be limited as other factors like global energy prices also play a role.
Energy Profits Levy Extension: The extension of the levy on energy companies raises additional revenue for the government, potentially funding further cost-of-living support measures. However, it could also discourage investment in the energy sector if companies feel profit margins are squeezed.
Public Services:
NHS Funding Boost: The £2.5 billion additional funding for the NHS in 2025 is a positive step towards improving healthcare services. However, some argue it might not be enough to address all the challenges the NHS faces, such as staff shortages and rising healthcare costs.
Tax Increases and Regulations:
Vaping Duty: The introduction of a vaping duty from October 2026 could potentially raise tax revenue and discourage vaping, aligning with public health goals. However, it might also be seen as a burden on vapers who have switched from smoking.
Capital Gains Tax Reduction: The lower rate for residential property capital gains tax could potentially increase property market activity, particularly for higher-value transactions. However, it might also exacerbate housing affordability issues in some areas.
Anti-avoidance Measures: The new legislation targeting individuals using companies to avoid income tax is a positive step towards closing tax loopholes. However, the effectiveness of this legislation depends on its specific implementation details.
Additional Considerations:
The statement did not address potential changes to income tax rates, which could be a point of discussion in the upcoming general election.
The success of the measures announced depends on various factors like global economic trends and consumer behaviour.
If you have any queries about the latest update and how it might affect you please feel free to get in touch so we can discuss how best we can support you.
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