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The economy and fiscal forecasts

  • The Office for Budget Responsibility (OBR) projects headline inflation to sink below 2% within a couple of months.
  • The OBR predicts underlying debt to be 91.7% in 2024-25, then 92.8% (2026), 93.2% (2027), 93.2% (2028), before falling to 92.9% in 2028-29.
  • Public sector borrowing is predicted to fall every year from 3.1% in 2024-25, then 2.7% (2026), 2.3% (2027), 1.6% (2028), and 1.2% of GDP by 2028-29.
  • The UK economy is forecast to grow by 0.8% this year and 1.9% next year, 2% in 2026, 1.8% in 2027 and 1.7% in 2028.

Taxes and duties

  • Hunt confirms that National Insurance contributions rates will be cut from 10% to 8% from 6 April 2024, a further 2% decrease from the Autumn Statement announcement which saw the rates decreased from 12% to 10%.
  • Self-employed individuals who pay Class 4 National Insurance will also enjoy a decrease from 8% to 6%.
  • The non-domiciled tax regime will be abolished and replaced with a “modern, simpler and fairer” system from April 2025. After four years, those coming to the UK will be taxed on their worldwide income.
  • Upper rates for Capital Gains Tax on properties will decrease from 28% to 24%.
  • The compulsory VAT registration threshold will increase from £85,000 to £90,000 from 1 April 2024.
  • Hunt announced a new British ISA, allowing investors to invest a further £5,000 in addition to the existing £20,000 annual allowance, which will be used to invest in UK equity with all of the tax advantages of other ISAs.
  • The furnished holiday let regime, yielding considerable tax benefits to landlords who let out their properties to holiday makers as opposed to long term tenants, has been abolished.
  • Air passenger duty for business class travelers will be increased.
  • The threshold that triggers the High-Income Child Benefit charge will be increased from £50,000 to £60,000, with the top taper (whereby the full benefit is withdrawn) increased from £60,000 to £80,000.
  • A vaping products levy on imports of vapes will be introduced in October 2026 which will be coupled with a one-off increase in tobacco duty.
  • Alcohol duty, set to increase by 3% from August, will be frozen until February 2025.
  • Fuel duty will also be frozen at its current level for a further year.

Public sectors and government spending

  • Defense spending to be 2.3% of GDP by next year.
  • £45 million will fund medical research to develop new medicines for diseases like cancer, dementia and epilepsy.
  • Day-to-day public spending will increase by 1% higher than inflation on average.
  • The NHS will receive a £2.5 billion day-to-day funding boost for 2024/25 to focus on reducing waiting times.
  • The Chancellor announced a Public Sector Productivity Plan with the aim of returning public sector productivity back to pre-pandemic levels and ensuring taxpayers’ money is spent as efficiently as possible. With £4.2 billion in funding, the plan aims to allow public services to invest in new technologies like AI, replace outdated IT systems, free up frontline workers from time-consuming admin tasks and take action to reduce costs down the line.

If you have any questions about any of the topics in this summary do not hesitate to get in touch with our SME accounting team. Our expert advisors can help you make the right decision. Give us a call on +44 (0) 20 7759 7553 or email accounting@sableinternational.com.