Spring Budget 2024 Countdown

Set against a backdrop of intense speculation, political manoeuvring and proximity to a potential general election, Chancellor Jeremy Hunt may need to announce bold measures in the forthcoming Spring Budget, says MALACHY McLERNON, Partner and Head of Corporate and Indirect Tax at AAB, an AAB Group company.

Uncertainty Swirls

The Chancellor confronts a challenging balancing act – expand spending commitments while maintaining robust revenue streams. The dilemma exists in an environment where the tax burden is at a 70-year high. As the Spring Budget 2024 nears (scheduled for 6 March), so does increased anticipation regarding the potentially significant steps that it might contain.

Income Tax and Inheritance Tax Expectations

Preliminary expectations of significant cuts to basic Income Tax are seemingly tamed by the recently revised economic forecast. Conversely, the Budget might see a marginal lowering of the basic rate. Similarly, the possibility of phasing out Inheritance Tax (IHT) has morphed into conjecture of a rate reduction from 40% to 20%.

Fiscal Influences and Calls for Reform

The Spring Budget needs to address concerns regarding ‘fiscal drag,’ where inflation puts individuals into higher tax brackets. The Government is pressed to tackle issues such as revamping IR35 (off-payroll rules) and refining the VAT registration threshold. However, comprehensive changes to duties like Capital Gains Tax are not expected due to the looming elections.

Business Taxes

Business-wise, the Spring Budget needs to foster a careful equilibrium between assisting businesses and generating revenue to execute Government initiatives. Corporation Tax saw an increase to 25% for profits surpassing £250,000 in April 2023. We may see the Chancellor retain this while refining existing reliefs and possibly introduce more to fuel growth.

Potential Agenda for Labour

Traditionally, Labour espouses progressive taxation policies that may lead to increased taxes on the affluent and companies. An emphasis on social spending and environmental sustainability could entail climate change prevention through environmental taxes and levies.

Sprint To Spring Budget Day

With Budget date fast approaching, the Chancellor is watched carefully. The Spring Budget must achieve a harmonious blend of fiscal responsibility, economic stability, and political strategy as it establishes the pathway for the national finances during this critical election year.

For in-depth discussions on the Spring Budget 2024, please contact MALACHY McLERNON, from our Tax Team.