With a general election later this year, Spring Budget did not bring any major surprises (or not what had already been released by the media).
This budget was aimed at trying to win over voters by reducing taxes and trying to support families. But is it enough?
As UK households continue to struggle with increased cost of living and high inflation, this budget is hoping to bring inflation down and give UK taxpayers more money to spend to move the UK economy in the right direction.
Taxes
Following last year’s Autumn statement with a reduction in national insurance, today’s announcement of a further cut will be well received by many. Employees national insurance has been reduced to 8% falling from 10% and 12% this time last year.
For self-employed individuals, national insurance falls from 8% to 6%. Following the autumn statement, Class 2 national insurance is also abolished from April.
The government is saying this will benefit the average worker by £450, but as costs continue to rise despite falling inflation, is this enough to help the economy grow?
Benefits
Child benefit sees an increase in the threshold from £50,000 to £60,000. As it currently stands, when you reach £60,000 the child benefit received needs to be paid back in full.
From April, this threshold increases to £80,000 at which point child benefit will be paid back. This is to try and support working families and to support the additional costs of having children.
A review of the current procedure is scheduled to take place, moving to a household-based system by April 2026.
The increase in the threshold will be welcomed by many families and help with additional costs. As a parent of two myself, any additional income helps cover the ever increasing costs.
VAT
VAT has not made a major appearance in recent budgets, therefore an announcement increasing the VAT registration limit from £85,000 to £90,000 is well overdue. The previous limit set back in 2017/2018 has been adjusted but does not factor in inflationary increases over that time period.
The cost of materials continues to increase and when these are passed on to the customer, the new £90,000 quickly diminishes. The increase to £90,000 to me does not seem enough.
Savings
The budget introduced a new British ISA to encourage investment in UK Companies to support the UK economy grow. This gives individuals another £5,000 on top of the current £20,000. Post-Covid and after recent high cost of living, the government are trying to get the UK economy back on track.
Summary
With the general election expected later this year, has Jeremy Hunt done enough to steer the Conservative government back on track to win over voters?
This budget seemed to be focusing on trying to revive the UK economy with cuts in taxes. Although inflation is on the way down, the cost of every day living still seems to rise so will the budget cuts be enough? The key for the UK economy is UK based business and with no real business support in this budget – how can the UK economy continue to bounce back?
If we see a change in government at the next election will we see a reversal of some of the policies being introduced? The forthcoming year may bring many changes. We will see how this year unravels.
If you have any questions about the budget announcements, please get in touch and I will be happy to help.