The Spring Budget on 6 March is likely to be the last major political statement the government makes before the upcoming general election. In the run-up, there have been heavy hints about tax cuts and help for first-time buyers to curry favour with the electorate, but what is expected from the Spring Budget 2024?
With the Conservatives trailing Labour in the polls, it is widely expected that the Chancellor will adopt a more populist approach in the Spring Budget 2024 in a bid to positively influence the electorate.
What can we expect from the Spring Budget 2024?
The Chancellor may not be able to ignore the positive PR of reducing personal tax liabilities. This could involve the basic rate of income tax being cut. But bear in mind a 1% cut in the basic rate of income tax costs the government £6bn annually. Or increases to personal allowances and personal tax thresholds.
Some have speculated that further cuts to National Insurance contributions might be announced, but having already been reduced last Autumn, this is probably unlikely.
Tax and National Insurance cuts may prove very short-sighted. Some economists fear that any more tax reductions would have to be balanced against cuts in the already financially strapped public services.
Inheritance tax (IHT) could also be impacted or even abolished. This is again questionable. IHT raises around £7bn for public services a year and only the wealthiest 4% of the population will ever pay it. This means scrapping IHT would not create any significant political capital.
Instead, the Chancellor could well decide to change the current thresholds (including the relevant gifting thresholds) so that they appear to be more in line with the rate at which house prices are increasing.
Some are touting that there could be an increase to the high-income threshold for child benefit. Under current rules, claimants must pay back 1% of every £100 they claim if they or their partner earns £60,000 or more.
Critics say the threshold being based on individual rather than household earnings is unfair, as it means a single parent earning £60,000 doesn't receive any child benefit, but a household with two people each earning £50,000 would get the full amount.
Another policy-based announcement could be a new 'vaping products levy' in addition to the VAT already charged on them; a tax could be imposed on a sliding scale based on the volume of nicotine present in the vaping liquid. This would be an active step to help make vapes too expensive for children and non-smokers.
It is also felt that the 5p rise in fuel duty planned for March 31st could be frozen again. This would cost the government an estimated £2bn but would be well received in the context of the cost-of-living crisis.
Many feel the Spring Budget 2024 will include help for first-time buyers. This could involve a 99% mortgage scheme that would enable buyers to move forward with a purchase having put down a deposit of only 1% with the government acting as guarantor.
Critics may see this as a transparent move to try and hold onto the younger end of the electorate, many of whom are struggling to get onto the property ladder. Others could feel that providing additional assistance would only paper over the cracks of the real issue, that there is not enough new housing stock being built and could itself lead to an unwanted hike in house prices.
We will, of course, provide a full summary of what is announced in the Spring Budget 2024 on 6 March.