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08 March 2024

Budget reaction: The final punt from Mr Hunt?

Budget reaction: The final punt from Mr Hunt?

UK Chancellor Jeremy Hunt has served the final Budget of the current governmental tenure. With the Conservatives looking unlikely to get in for another term, we may have expected him to throw some money around to woo consumers and businesses. Unfortunately for Mr Hunt, the cupboard is pretty bare. And after the tumultuous demise of his predecessor, the Chancellor probably (rightly) thought that gimmicks and flashy tax cuts were too much of a gamble.

Heartening news for employers

That said, there was good news for tax-payers with 2 pence deducted from National Insurance, which is also heartening news for employers, who will hopefully benefit from lower wage rises to cash-strapped workers and also see more people applying for lower-earning jobs as the deduction is designed to remove, as the Chancellor termed it, the “penalty on work.”

Other good news took a somewhat less exciting tone with freezes rather than reductions with fuel duty & alcohol duty the same for another year. The salary threshold at which child benefit is withdrawn has increased though from £50k to £60k which will relieve more pressure for the squeezed middle.

How does he pay for this?

Funding his £12.6bn a year of tax cuts, the Chancellor set about the people most politically expendable, i.e. Non-dom tax avoiders, energy companies and vapers. These measures should raise nearly £7bn by the end of 2028 and included:

  • reforming non-domiciled tax status
  • extending the oil and gas windfall tax for an additional year
  • adding a new tax on vaping
  • increasing the levy on non-economy class air travel
  • raising tax on furnished short-term home lets

Very little for businesses

Some well-flagged shake-ups failed to materialise. Inheritance tax for the second time running was left unchanged, despite being discussed in the run-up. Nor did the broader income tax cut materialise – so nothing for pensioners.

But there was also very little for companies (at least in the short term) or the housing market. The Hospitality sector in particular has been hit hard by rocketing costs and had been calling for a VAT cut, but received nothing. There were no stamp duty cuts or mooted 99% loan-to value mortgages to rouse the housing sector.

KPI MD Ryan Jardine said, “The budget offered a bit less than we were hoping for in terms of help for businesses, although there is some welcome encouragement for workers and those looking to get into work. It’s doubtful that these somewhat conservative (with a small c) measures will change the trajectory for the economy or the election. Whilst KPI as enjoyed an encouraging start to the year, the new business we’ve won is more about the exclusivity of our offering rather than a booming UK economy.”