Budget 2024

Rise in VAT threshold among moves to boost growth

Jeremy Hunt delivers his Budget in the Commons

Chancellor Jeremy Hunt used his Budget to deliver a VAT boost for thousands of businesses, confirm a national insurance cut, and instigate a digital transformation of public services to save money and improve performance.

Mr Hunt cut national insurance as forecast and later said it was his ambition to abolish it altogether. He froze alcohol and fuel duty until next year but dealt a blow to the oil and gas industry by confirming that the the windfall tax on company profits will be extended for another year.

The Chancellor removed a swathe of tax reliefs on holiday lets in England to free up homes for local people and scrapped non-dom tax status.

There will be a push to get pension schemes investing in British technology while individual savers will be encouraged to put their money into business ventures.

As forecast, there will be a new excise duty on vaping products from October 2026 and a one-off rise in tobacco duty while air passenger duty will rise for business class flights.

The Scottish Government will receive £295m in Barnett consequentials, with £170m for the Welsh Government and £100m for the Northern Ireland Executive.”

Mr Hunt opened his Budget address by saying that that since the Conservatives came to power in 2010 growth has been higher than every large European economy – unemployment has halved, absolute poverty has gone down and there are “800 more people in jobs for every single day the party has been in office”.

Noting that inflation had fallen from 11% to 4%, he said growth had outstripped a number of other western economies.

“We have turned the corner on inflation and soon we shall turn the corner on growth,” he said.

But despite his tax cuts, taxation experts said the overall tax take will still be greater because of his decision not to raise income tax thresholds in line with inflation. This means more people being dragged into higher tax bands.

FSB Scotland policy chair Andrew McRae said: “All eyes in Scotland will now be on how the Scottish Government chooses to use the £295 million it is set to receive in Barnett consequentials. 

“Calls from the hard-pressed retail, leisure and hospitality sectors for the rates reliefs enjoyed by their counterparts south of the border will become increasingly hard to discount.”

Commenting on the full package of measures, Struan Stevenson, chief executive of the pro-union lobby group Scottish Business UK, said: “These tax-cutting measures, which apply across the whole of the UK, are in sharp contrast to the SNP/Green government’s determined efforts always to make Scottish taxpayers pay more.

“It is little wonder that Shona Robison [Scotland’s Finance Secretary] pled with the UK Chancellor not to cut income taxes south of the border – further tax divergence would have been hugely damaging to the SNP/Green government’s fiscal competence and laid bare the fallacy of their ‘progressive’ tax strategy, which is fuelling the progressive decline of business and industry in Scotland.”

Ms Robison said: “Today’s UK spring budget is nothing short of a betrayal of public services across the UK.

“Public services up and down the UK are in real need of investment, and they’re being sacrificed to deliver unsustainable tax cuts.”


National insurance

From 6 April employee national insurance will be cut from 10% to 8%, saving an average of £450 a year, and for the self-employed from 8% to 6%.

“When combined with the autumn reductions, it means 27 million employees will get an average tax cut of £900 a year and two million self-employed a tax cut averaging £650,” he said. “Changes that make our system simpler and fairer. And changes that grow our economy by rewarding work.”

Sean Cockburn, chairman of the Chartered Institute of Taxation’s Scottish technical committee, said: “Cutting national insurance rather than income tax means the chancellor can say his decisions on personal taxes benefit taxpayers across the UK.

“Had he chosen to cut income tax in England, this would have resulted in further divergence with Scotland.”

The move to cut national insurance was broadly welcomed by business, though Bruce Cartwright, ICAS chief executive, said: “The Chancellor has again failed to offer enough support for small and medium sized businesses (SMEs), which make up 99.9% of UK businesses and are the life blood of the economy. 

“Employment costs for UK employers are soaring, and the fact that the Chancellor hasn’t cut NICs for employers in this budget, as he has for employed and self-employed workers, places further strain on business as they face rising costs on all fronts.”

Bruce Cartwright
Bruce Cartwright: a failure to support SMEs

Mark Pryce, head of business tax with Azets in Scotland, said:  “Reducing employees national insurance will provide a significant tax saving for around 29million people in work.  These direct savings are amplified when applied to low tax employee benefits such as Electric Vehicles and Hybrids.

“Pensions salary exchange can make this go even further. Despite being taxable benefits in kind for employees, private health insurance, gym memberships are all allowable against corporation tax.  Recruitment, retention and reward is now centre stage and with well over 20 common employee benefits now available, businesses will be looking at how Employee Benefits can be used to drive productivity and growth.”

VAT threshold rises, full expensing extended

Mr Hunt increased the VAT registration threshold from £85,000 to £90,000 from 1 April, the first rise for seven years.

“This will bring tens of thousands of businesses out of paying VAT altogether and encourage many more to invest and grow,” he said.

Having listened to calls from the CBI and Make UK, Mr Hunt said he will shortly publish draft legislation for the full expensing tax break on investment to apply to leased assets, “a change I intend to bring in as soon as it is affordable.”

Alcohol and fuel duties frozen

The freeze on alcohol duty, which was due to end in August, has been extended to February next year, along with a freeze on fuel duty. The alcohol freeze will benefit 38,000 pubs across the UK, said Mr Hunt.

This was on top of the £13,000 saving a typical pub will get from the 75% business rates discount, though this only applies to England. “We value our hospitality industry and we are backing the great British pub,” he said.

Scotch whisky
Duty on whisky will be unchanged

The fuel duty cut will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250.

“Taken together with the alcohol duty freeze, this decision also reduces headline inflation by 0.2 percentage points in 2024-25 allowing us to make faster progress towards the Bank of England’s 2% target.”

Public sector IT investment

Mr Hunt announced a Public Sector Productivity Plan to reform the process of public spending. This will include greater digitisation and use of AI across the NHS, cutting down on form filling and freeing up doctors’ time.

He said investment is needed to modernise NHS IT systems “so they are as good as the best in the world”. The £3.4bn cost will help unlock £35bn of savings.

He is providing £230m for technology which speeds up police response times.


He is reforming the ISA system to encourage more people to invest in UK assets. “After a consultation on its implementation, I will introduce a brand new British ISA which will allow an additional £5,000 annual investment for investments in UK equity with all the tax advantages of other ISAs,” he said.

The Treasury intends to proceed with a retail sale for part of the government’s remaining NatWest (|RBS) shares this summer “at the earliest”, subject to supportive market conditions and value for money. From a peak of 84% in 2009, the Treasury now owns about 31.85% having sold another chunk of shares.

He confirmed plans to divert more pension fund capital into tackling the lack of investment in British technology companies.

“I want our brilliant technology entrepreneurs not just to start here but to stay here, including when the time comes for a stock market listing. So we will build on the Edinburgh and Mansion House reforms to unlock more pension fund capital.

“We will give new powers to The Pensions Regulator and Financial Conduct Authority to ensure better value from Defined Contribution schemes by judging performance on overall returns not cost.

“But I remain concerned that other markets such as Australia generate better returns for pension savers with more effective investment strategies and more investment in high quality domestic growth stocks.

“So I will introduce new requirements for [defined contribution] and local government pension funds to disclose publicly their level of international and UK equity investments. I will then consider what further action should be taken if we are not on a positive trajectory towards international best practice.”


The windfall tax on energy profits is extended for a further year to 2029. Mr Hunt says this will raise a further £1.5bn.

He justified the decision as being “because the increase in energy prices caused by the Ukraine war is expected to last longer, so too will the sector’s windfall profits.”

Andy Mayer of the Institute of Economic Affairs said: “Before the invasion the oil price was around $80 a barrel. Today it is around $80 a barrel. [That is] within the normal range for this commodity, not a windfall.

He said one option would be a clear and stable windfall regime with tiered rates transparently linked to prices. 

Scottish Conservative leader Douglas Ross said: “While I accept the Chancellor had some tough decisions to make, I’m deeply disappointed by his decision to extend the windfall tax for a further year. 

“The SNP and Labour have abandoned 100,000 Scottish workers by calling for the taps in the North Sea to be turned off now.

“Although the UK Government rightly oppose this reckless policy – and have granted new licences for continued production in the North Sea – the budget announcement is a step in the wrong direction.

“As such, I will not vote for the separate legislation needed to pass the windfall tax extension and will continue to urge the Chancellor to reconsider.”

Scottish Tories at war with Chancellor

However, Chris Danes, partner at MHA, said: “The detailed rules.. confirm that the regime could end sooner rather than later if the six-month average price for both oil and gas falls below specified amounts of $71.40 per barrel of oil and £0.54 per therm of gas.

“Hence, rather than a tax increase, the Budget announcements today could end up being a tax cut for oil and gas businesses.”

The Chancellor pledged £120m to “build supply chains for new technology ranging from offshore wind to carbon capture and storage.

Rolls-Royce small modular reactor
Modular reactors are being encouraged

He said he wants nuclear to provide up to a quarter of Britain’s electricity by 2050.

“As part of that, I want the UK to lead the global race in developing cutting-edge nuclear technologies.

“I can therefore announce that Great British Nuclear will begin the next phase of the Small Modular Reactor selection process, with companies now having until June to submit their initial tender responses.”

Industry and economic growth boosters

There will be £270 million for advanced manufacturing industries, to fund car and space innovation, to grow zero emission vehicle and clean aviation technology.

The SaxaVord spaceport on Shetland has secured £10m to complete infrastructure in preparation for the first orbital launch from European soil planned for later this year.

The investment zones programme, which provides incentives and tax reliefs, is being extended from five to ten years.

The Glasgow city region and the northeast of Scotland, will each have access to £160m over that period.

An agreement with the Scottish government will allow tax reliefs on the two green freeports to be claimed until September 2034.

Support for the arts

Dundee’s V&A museum has secured £2.6m for an overhaul and expansion of its showcasing of Scottish design.

The waterfront attraction has been allocated “Levelling Up” funding for a major capital project. The funding will be ringfenced for the biggest overhaul of the museum’s offering since it opened in the autumn of 2018.

V&A Dundee
More cash for the Dundee V&A (pic: Terry Murden / DB Media Services)

There is more money for film studios in England. “Having listened to representations from companies such as Pinewood, Warner Brothers and Sky Studios, eligible film studios in England will get 40% relief on their gross business rates until 2034,” said Mr Hunt.

He has made permanent the higher tax reliefs introduced during the pandemic for orchestral productions.


The higher rate of capital gains tax (CGT) on property will be cut from 28% to 24% from April in a move the Government said would “fire up” the residential property market.

This aims to encourage landlords and second homeowners to sell their properties, making more available for a variety of buyers including those looking to get on the housing ladder for the first time.

However, second home owners who let their properties out to holiday makers will be hit with a number of tax rises.

The furnished holiday lettings regime will be abolished. He also called time on a Multiple Dwelling Relief which was for people who purchased more than one dwelling in a single transaction and was intended to support investment in the private rented sector.

“An external evaluation found no strong evidence that it had done so and that it was being regularly abused. So I am going to abolish it,” he said.

The government has announced it will scrap and reform the tax break for wealthy foreign residents in the UK who have non-domiciled tax status.

Hunt says it will make the system “fairer and competitive”. It will be replaced with a “modern residency system”.

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