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Spring Budget 2024: A Budget in Bloom, or Just Window Dressing?

The Chancellor's Spring Budget has arrived, and with inflation squeezing household budgets, many were hoping for a financial spring clean. Let's delve into the key measures and see if they'll help your wallet blossom, or leave you feeling a bit parched.

Tax Tweaks: National Insurance and VAT

Standing tall in the budget were cuts to National Insurance (NI). Employees will see a further 2% reduction, bringing the main rate down to 8%. The self-employed also get a helping hand with a 2p cut in their NI rate. This follows on from Autumn Statement cuts, offering some relief for those feeling the pinch.

For businesses, there's a change in the VAT registration threshold. Smaller businesses with a turnover below £90,000 won't need to register for VAT, simplifying their tax burden.

Cheers to More Time! Alcohol Duty Freeze Extended Until 2025

Good news for pub-goers and hospitality businesses! The Chancellor has announced an extension of the alcohol duty freeze, keeping prices stable until February 2025. This comes after a previous freeze that was due to expire in August 2024.

What it Means:

  • The current tax system for alcohol, implemented in August 2023, will remain unchanged. This means all drinks are taxed based on their alcohol content, simplifying the system.

  • The average pint of beer will see a 2p reduction in duty, potentially translating to lower prices for consumers.

  • The Chancellor estimates this will benefit over 38,000 pubs across the UK, providing a welcome boost to the hospitality industry.

A Helping Hand for Families: Child Benefits

To support families with the rising cost of living, the threshold for receiving full child benefits has been increased. Now, households with a highest-earning parent making up to £60,000 will qualify, offering a potential boost of up to £1,260 for some families.

However, this isn’t the only changed plan for childcare benefits. Good news for working parents! As of 2026, childcare benefits will be based on combined household income, rather than individual parental income.

The Inflation Elephant in the Room

While the tax cuts and duty freezes offer some welcome relief, inflation remains a major concern. The budget expects inflation to fall to the Bank of England's 2% target later this year, but with current rates still at 4%, many are cautious. The question lingers: will these measures be enough to offset rising costs of everyday essentials?

A Budget for the Long Term?

The Spring Budget also addressed other areas, like plans to increase house building and a potential review of landlord taxes. These measures have long-term implications for the housing market, so it's important to consider the bigger picture.

What Does it Mean for You?

The impact will depend on your situation. Employees and the self-employed can expect a bump in their take-home pay. Businesses under the £90,000 threshold benefit from the VAT change. However, the long-term effect on inflation is a question mark.

Stay Informed and Engaged

The Spring Budget is a complex document with far-reaching consequences. Keep yourself informed by following reliable financial news sources. If you're unsure how these measures affect you, don't hesitate to seek professional advice. With an election on the horizon, expect further debate around these measures and the country's economic direction.



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