Spring Budget 2024 Predictions

In anticipation of the 2024 Spring Budget which will take place on the 6^th March, we asked our experts for their thoughts and predictions as to what measures the government might announce in the Budget statement ahead of the General Election later this year. The backdrop of a cost of living crisis, lack of growth and looming threat of recession, all paint a bleak economic picture, so it will be interesting to see how the statement looks to address the current state of affairs whilst trying to present a positive outlook for the forthcoming changes in order to try and win votes.

Our experts all agreed that there will be a desire to make an impact ahead of the election. There are a few common areas predicted to be targeted by the Chancellor. There are expectations of tax cuts to support the government's political agenda. Potential areas for reform include Income Tax, Corporation Tax, Inheritance Tax (IHT), Capital Gains Tax (CGT), and pensions.

Many of the predictions hint towards a focus on making adjustments that benefit a broad spectrum of the population, such as an income tax reduction, reforms to the High-Income Child Benefit Charge (HICBC), and increases in personal allowances.

We will have to wait and see what will be delivered on the day, and of course we will be providing our reactions and commentary at that time, but until then, it seems our experts think that the Chancellor's strategy is likely to prioritise tax-saving measures to secure favourable voting across the board.

Our Expert Predictions

Read more detailed thoughts from our panel below.

David Fort

Managing Director, Manchester

“There may be an income tax reduction ahead of the election, also they may seek to add conditions to Employee Ownership Trusts (EOTs) to prevent the use of offshore trusts and who can be a trustee. We may see an increase in limits for High Income Child Benefit Charge and an increase in the Nil Rate Band and Residence Nil Rate Band for Inheritance Tax. There’s also a possibility of Stamp Duty Land Tax relief and they may stall the reduction in the dividend allowance and Capital Gains annual exemption as a pre-election sweetener.”

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Ian Haynes

Tax Director, Scotland

It’s fairly clear that in this election year, the Chancellor will want to carve a successful political path in the 2024 Spring Budget. Rumours of the green light for further tax cuts are circulating, supported by a downward trajectory for inflation, and desire to be a low tax nation. How could this be done?

Income Tax – a rate cut might be an answer, creating a tax saving for most people paying income tax, but as a devolved tax, a change to the English rates would not necessarily be mirrored elsewhere around the UK.
Corporation Tax – the 25% company tax rate has only recently begun, but has been unpopular, and while it’s probably not too late to change things, a reversal may not look good for the Government.
Employment taxes – we have already seen the NIC reduction for 2024, and while it’s not a ‘tax’, this does increase the net pay packet for most, but could further employment related savings be introduced, such as a reduction in the taxation of employer benefits in kind.
IHT – there were changes mooted last year that didn’t materialise, so could this Budget be the place when IHT is reformed or possibly even abolished.
CGT – while rate changes may not be on the cards, increased reliefs could help those who sell certain types of assets, to reduce their tax cost.
Pensions – the annual allowance could be significantly increased to allow higher levels of pension saving, and the rules surrounding other areas of pensions (e.g. over-funding, residential properties being held by pension funds etc.) could be revised, creating tax breaks for some.

I suspect the population will want to see something for everyone – sole trader, company owner, employee and pensioner, which is a tall order to meet!

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Hasan Shaikh

Senior Tax Manager, Tamworth

Given the recent increase in the tax receipts collected, a General Election year may be an opportune time to reverse the fiscal drag stealth tax. Tax thresholds have not been adjusted for rising inflation and the subsequent increase in wages has led to an increasing number of taxpayers being pushed into the higher rate tax bands. An adjustment to the income tax thresholds will be welcomed by ballot marking voters.

Scrapping a tax rule removes the administrative cost of regulation. The replacement of the abatement of the personal allowance with a cliff-edge removal at the Additional Rate would be less cumbersome. And it might mean more of our MP’s are able to pay their mortgage!

A U-turn is never popular. But a reduction of the CT rates will make the UK more attractive to inwards investment. Moreso, given the red tape brought about by Brexit.

IHT has always affected a small proportion of taxpayers and therefore always lacks relevancy. The Tory party will be looking for a flagship tax cut to woo their main voter base. Will they finally scrap it, or is this the ace manifesto pledge hidden up their sleeve?

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Martin Gurney

Tax Partner, Swindon

“It is not unusual for the incumbents to do badly in by-elections, but the Conservative Party must still be nervous about their chances of success at the next election. So I am expecting a very ‘political’ Budget. I also believe that the Chancellor has been keeping his powder dry in order that he has some room for manoeuvre in this Budget. So expect some limited, vote-chasing giveaways for income tax and business tax, backed by economic forecasts that one might suspect they will claim clearly indicate they are exceeding even their own expectations!”

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Mark Roe

Director, Derby

The 2024 Spring Budget is going to be an important one – it is the last opportunity for the government to propose changes to taxation before the general election later this year.

For this reason, I think that the Chancellor will focus on measures to save tax in the hope that this results in more favourable voting.

An easy win would be to announce a reform into the current Child Benefit rules and in particular the High-Income Child Benefit Charge (HICBC). This will follow nicely from the Chancellor’s announcement in the 2023 Spring Budget to expand 30 hours free childcare – providing even more help to working families.

The current HICBC threshold of £50,000 is outdated, has not been increased in-line with inflation and is out of line with the higher rate threshold. The threshold is based on ‘adjusted net income’, which is poorly explained – leading to many making repayments based on what they believe their income to be.

Many taxpayers end up paying back too much as they do not realize their adjusted net income can be reduced, by personal pension contributions, 'relief at source' employer pension schemes or gift aid donations.

Reforming the HICBC will benefit a lot of families; a family of 4 could have an additional £2,075 to spend which would be a boost to the economy!

As the National Insurance contribution percentages were cut at the start of the calendar year, providing a much-needed tax saving, I do not think the Chancellor will provide any further changes to the Income Tax or National Insurance rates for the near future.

However, I would like to see plans for an increased personal allowance. The current threshold of £12,570 has been in place since the 2021 – 2022 tax year and has not been increased in line with inflation or the increase in National Minimum or Living Wage rates over the years.

The National Living Wage has gone up £2.53 per hour since this tax year which is pushing taxpayers further and further into the basic and higher rate tax brackets.

Increasing the personal allowance proportionately in line with the Living Wage would give a tax-free allowance of £16,140, resulting in a saving per taxpayer of £714!

Finally, I’d like to see an increase in the Capital Gains Tax annual allowance.

The gradual decrease in allowance from £12,300 in 2020 – 2021 to £3,000 for 2024 – 2025 is going to cause a headache when selling homes that are not an individual’s Principal Private Residence. A higher rate taxpayer will be required to pay £2,604 more tax than if they had sold their property in previous years.

With the increase in mortgage rates and reform in tax relief for mortgage interest many landlords are finding it untenable to continue renting their properties – and are then stuck with a higher Capital Gains Tax bill to pay when the property is sold.

This will also have a great effect on taxpayers with small investment portfolios. Shares are sold and bought throughout the year, with the total proceeds normally being less than the annual exemption, resulting in no tax charge.

The current reduction in annual allowance will result in Capital Gains Tax becoming chargeable and more taxpayers will be required to submit Self-Assessment Tax Returns.

Will this result in a long-term impact on the growth of an individual’s investment portfolio?

Unfortunately, I do not think the Chancellor is going to announce any changes in Capital Gains in the Budget after the release of Rishi Sunak's and Keir Starmer’s tax returns in mid-February (which showed significantly less tax paid due to the decreased Capital Gains Tax rates of 10/20% (18/28% for residential property) compared to Income Tax rates.

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Shazin Tayub

Director, Leicester

Given that the Spring Budget is the final opportunity for the Chancellor to lay out his plans before the election, I think the focus is likely to be tax cuts for the mass population. The speculation is already doing the rounds but here is some of my thoughts:-

Income Tax Cuts- in the Autumn statement last year, the chancellor discussed his intention to introduce tax cuts for basic rate tax payers. There is a rumour that this could reduce from 20% to 18%. Whilst this could be tempting for a chancellor for an election year, it could still be delayed to avoid adverse effects of inflation.
National Insurance- With cuts to National insurance introduced in the last Budget proving popular, a predicted further 1p cut could be introduced to incentivise work. Again, the chancellor is likely to be tempted to move forward with this cut to attract more votes.
High Income Child Benefit Charge- this has caught out many taxpayers, particularly couples, and could be reviewed by potentially raising the £50,000 threshold.
IHT- ongoing speculation of scrapping, however more likely a reduction in the rate or increase in the nil rate band of £325,000.
Pensions – expectation that the annual allowance will be increased further and there may be further relaxation of pension rules.
CGT – possible adjustments to annual exempt amount
Stamp Duty- Talks of a cut in the rates of stamp duty or the introduction of a discount scheme for first-time buyers or downsizers to give a boost to the property market.
Corporation Tax- Unlikely to change from the current rate of 19% and 25% for businesses with profits above £250,000.
VAT- Raising the VAT registration threshold from the current rate of £85,000 could encourage small businesses to continue to grow as some may take measures to remain below the threshold to avoid registering for VAT.