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Find out how the Chancellor’s plans for housing, income tax, benefits and more could affect you.
Spring Budget 2024
Chancellor chat
It’s almost impossible for Chancellors to avoid financial terms when they speak. Here’s a guide to some of the most commonly used terms.
Talking finance
Money matters
The Budget’s the big one but other major Government updates impact your household budget too. Discover tips and advice on how you can take control with our money management guides.
Money management
- Your income and tax Your income and tax
- Your benefits Your benefits
- Your investments Your investments
- Your spending and bills Your spending
- Your property Your property
- Your income and tax
Your income and tax
Yesterday’s budget included changes to National Insurance which could affect your income.
Here are some of the key changes to be aware of:
- National Insurance: 2% cut to Employee National Insurance contributions (NIC), will bring down the rate from 10% to 8%. NICs for those who are self-employed have also been reduced, cutting the main rate of Class 4 self-employed NICs to 6%. Meanwhile, income tax rates haven’t changed and stay at 20%, 40% and 45% respectively for basic, higher and additional rate taxpayers (Scottish income tax rates may differ). The threshold at which you start to pay income tax, known as your personal allowance, stays at £12,570 for the 2024/2025 tax year. For more information on tax rates and allowances, read our guide
- VAT threshold for small businesses: There was some good news for small business owners – the government has increased the amount you can earn before you need to register for VAT. From 1 April 2024, this threshold is going up from £85,000 to £90,000.
- Your benefits
Your benefits
Here’s a summary of the headlines:
- Increased Child Benefit thresholds: Previously, families earning over £50,000 per year had their Child Benefit reduced. Now, this limit has been raised to £60,000. Additionally, the threshold at which the benefit is fully withdrawn has been extended to £80,000
- Childcare rollout confirmed: Although the Chancellor didn’t announce any new childcare changes, he did confirm plans announced in his previous budget would go ahead. So, from April 2024 working parents of two-year-olds will be eligible for 15 hours of free childcare per week. From September 2024, this 15 hours of free childcare will be extended to working parents of all children aged nine months and over. And from September 2025, the full entitlement of 30 hours of free childcare per week will be available for eligible working parents of children under the age of five
- Additional Universal Credit help: While the 2024 Spring Budget didn't directly change Universal Credit amounts, it did extend repayment periods for loans from 12 to 24 months and ended the £90 charge for getting a Debt Relief Order. The Chancellor also pledged to continue supporting struggling families through the Household Support Fund.
Changes announced in the Autumn Statement 2023:
- State pension payments: The government previously confirmed that the state pension will increase by 8.5% to £221.20 from April, with no change to the retirement age of 66 (rising to 67 in 2026 and 68 later).
- Your investments
Your investments
Here’s a summary of the announcements:
- New BritishIndividuals Savings Account(ISA):This will incentivise investments in UK companies and extend the allowance beyond the existing £20,000 per tax year. The launch date has not been announced, as the government promised to consult on the details
- New British Savings Bond: The Chancellor introduced a new 3-year fixed-rate savings bond that’ll be delivered through National Savings and Investments (NS&I) in April. The government will announce more information on the interest rates soon
- If you’re able to put away some extra money each month, you might want to start saving. See ourguide to saving and investing, or learnhow to set and track savings goalswith our app.
Changes announced in the Autumn Statement 2023:
- A package of planned ISA simplification changes
- Capital Gains Tax (CGT): Before 6 March, it was decided that from April 2024, the annual CGT exemption would halve to £3,000. Just two years ago, this allowance was £12,300. It’s now much smaller
- Dividend allowance: This is the amount you can earn tax-free from share dividends each tax year. It’ll reduce to £500 for the 2024/2025 tax year
- Pensions: The government will be looking closely at British pension funds to check that they have enough British assets in their portfolios. It wants to boost overall UK investment and sees pension funds as a good way of achieving this goal.
- Your spending and bills
Your spending and bills
The cost-of-living crisis and the global surge in energy prices have affected some household finances in recent years. Rising inflation has also resulted in higher prices for products and services.
Against that challenging backdrop, here’s a recap of the big announcements:
- Fuel duty cuts extended: The existing 5p per litre cut in fuel duty has been extended for another year, maintaining the current rate
- Freezes to alcohol duty: The planned 3% rise in alcohol duty has been scrapped, and the current rate will stay in place until February 2025
- Vaping and tobacco: A new excise duty will be introduced on vaping products in 2026 to discourage non-smokers from vaping. Additionally, there will be a one-off increase in tobacco duty
- Air travel: The government has announced an increase in Air Passenger Duty (APD) for non-economy passengers, making business class and first class travel more expensive.
- Your property
Your property
Property related announcements were focused on those who own more than one home. These included changes to holiday rentals aimed at freeing up more accommodation for longer-term lets.
These are some of the headline announcements:
- Holiday rental changes: The Chancellor is changing the furnished holiday lettings regime. This makes it less profitable for second homeowners to rent to (short-term) holidaymakers
- Stopping stamp duty relief for multiple purchases: The government is also ending stamp duty relief for individuals purchasing multiple properties. This is known as the multiple dwellings relief
- Reduction of capital gains tax for residential property: The government also announced a reduction in the higher rate of capital gains tax for residential property that is sold. It moves from 28% to 24%.
Spring (or Autumn) Statement
Although historically seen as having less impact on household finances than a Budget, it’s still considered to be a major seasonal update on the Government’s finances.
Think of it as a check-in, months after a Budget, to let the country know how it’s all going.
Spending Review
These tend to take place every two to four years and set out what the Government expects to spend on public services (and where) over the next few years.
Other announcements
Governments typically aim to deliver one Budget and seasonal statement a year. But major events – both political and economic – can put pressure on Chancellors to deliver extra financial updates. Previous examples include the mini-Budget in September 2022.
What does the financial language mean?
As custodian of the nation’s purse strings, it’s almost impossible for any Chancellor to avoid using lots of financial terms when they speak.
You’ll often hear the same words and phrases over and over again, and if you’re unsure of their meaning, it’s easy to lose track.
Here’s a guide to some of the most commonly used terms.
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This is the interest rate that the Bank of England chargesbanks and lenders when they borrow money from it. In turn, the base rate influences the rate of interest you pay when you take out a mortgage, personal loan or other types of credit.
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Governments borrow money to pay for their plans and fund its many obligations to the country, for example for public services or huge infrastructure projects. How does it do it? By selling bonds, known as ‘gilts’, to financial bodies such as pension funds or insurance companies. These bonds will be paid back by the Government in the future but – in the meantime - pay out interest to the holders.
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Often confused with the national debt (see below), the deficit is when the Government spends more than it receives in tax and other revenues – and then has to borrow to cover the difference.
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It’s a type of tax paid on specific goods, services or transactions. Examples include stamp duty on a home, fuel duty on petrol or diesel, and alcohol duty on beer or wine.
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Policy is the giveaway word here: it’s simply the Government’s strategy for using taxes and spending to try and influence how the economy performs. The typical aims of a fiscal policy include keeping prices and wages stable, encouraging ways to boost employment, keeping inflation low and long-term economic growth.
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In essence, this general term simply means any sort of major financial update. However, it’s also been used by Governments to describe particular events – the Mini-Budget was initially called a fiscal statement until it was rebranded.
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In a nutshell, this is an estimate of the size and health of a country’s economy over a period of time - over three months (a quarter), say, or a whole year.
There are three ways to measure it, according to the Bank of England.
It’s worked out by either adding up the total value of: goods and services (‘output’) produced in the country; everyone’s income; or what everyone in the country has spent.
To measure GDP each quarter, the Office for National Statistics collects data from thousands of UK companies.
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At its simplest, it’s the rate at which prices rise for goods and services over time.
The rate is calculated by the Office for National Statistics, which checks the prices of over 700 popular purchases (such as a loaf of bread or a new car).
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Levies are another form of tax paid to the Government. For example, the Apprenticeship Levy must be paid by all UK employers with an annual wage bill of over £3 million.
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When Chancellors talk about ‘the markets’, they tend to mean the financial markets where buyers and sellers trade securities such as bonds, stocks and other investments. What happens in the markets can affect the UK’s economy, and vice-versa.
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This is the total amount of money the Government has borrowed on behalf of the nation, mostly through the sale of gilts on financial markets. As of September 2022, it stood at roughly £2.4 trillion, or 98% of GDP.
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Paid by employees, employers and the self-employed, it helps to pay for some state benefits including the state pension and maternity allowance.
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A public body set up to give independent economic forecasts and analysis of the country’s public finances, it scrutinises the Government’s fiscal plans.
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This is what the Government departments spend money on - providing services to the public such as health care or education.
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Also known as His Majesty’s Treasury, this Government department is headed by the Chancellor. It controls public spending, sets the UK’s economic policy and aims to promote economic growth.
We don’t offer financial, legal or tax advice. Tax laws can change and how they can affect you depends on your situation. If you need help, please get professional advice. You’re responsible for managing your own taxes, money and legal matters – this includes making any filings and payments and following applicable laws and regulations.
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