Tax cuts predicted for 2024 Spring Budget

27th February 2024 by NASGP

Tax cuts predicted for 2024 Spring Budget

Financial journalists have predicted tax cuts in the Spring Budget scheduled for 6 March ahead of a possible election later this year.

A number of titles led on speculation that the budget would be aimed at improving individual taxpayers’ bills:

  • Chancellor Jeremy Hunt gave ‘strong hints’ that he wants to cut taxes, the BBC reported.
  • The Times speculated that inheritance tax may be abolished, and that higher earners may be entitled to receive greater child benefits.
  • The FT highlighted the possibilities of a cut of the 20p basic rate of tax, and a rise in the threshold at which the 40p rate kicks in.

In the specialist press, executive director of the Institute of Financial Accountants (IFA) Jonathan Barber told Accountancy Daily he expected to see a 2p cut in the basic rate.

Meanwhile, The Independent warned that Hunt may also cut public spending by billions of pounds. The Institute for Government also noticed that Hunt prioritised household finances over public services in the autumn budget, and that inflation meant that services like the NHS are now struggling to make their frozen funding go further.

Hunt used the 2023 Spring Budget to abolish the lifetime allowance. Last September, financial advisors Wesleyan revealed that the drop-out rate from the NHS pension fell by 46% year on year following this change.

During the autumn statement last November, the chancellor reduced national insurance for employees, such as salaried GPs, by 2%. For a salaried GP on £50,000, this could mean a saving of around £700 a year, specialist medical accountant and chair of the Association of Specialist Medical Accountants Andrew Pow explained at the time.

GPs locums benefited from the abolition of Class 2 National Insurance contributions and a 1% cut in Class 4 contributions to £50,270.

But, Pow said, the bigger picture was that because income tax thresholds remain frozen until 5 April 2028, more GPs now pay more tax at higher levels.

Between October and December the UK economy went into recession, the Office for National Statistics revealed earlier this month.

Dr Richard Fieldhouse, NASGP chair, said: “While we certainly welcome the potential relief that tax cuts could bring to individual taxpayers amidst rising living costs, it is crucial we do not lose sight of the bigger picture. The health of our nation relies heavily on robust public services, particularly the NHS and our GP workforce.

“Tax cuts might be a short-term incentive to re-elect a government, but it’s the funding long-term plan we need to be voting on.

“As we approach a possible election, we urge the Government to demonstrate a clear commitment to investing in these essential services. A thriving NHS is not just about managing costs, but about strategic, long-term investment in our healthcare professionals. It is our hope that this will be a key consideration in the upcoming Spring Budget.”

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