Chancellor cuts NI by a further 2p as part of Spring Budget

Chancellor Jeremy Hunt has announced a further 2p cut to National Insurance, falling from 10% to 8% from 6 April, as part of his Spring Budget for “long-term growth”.The reduction in National Insurance is expected to save the average worker £450 a year, or £350 for those who are self-employed. 

This cut to National Insurance follows the 2p cut announced by Hunt in the Autumn Budget last year.

However, the chancellor resisted calls from retail and hospitality bosses to cut business rates and abolish the current level of tourist tax. Reports Hunt could also move to reduce national income tax were also unfounded. The level of corporation tax was also left unchanged. 

Alcohol duty was set to rise by 3% but the chancellor announced that he has extended the alcohol duty freeze until February 2025. 

He claimed that this would benefit around 38,000 pubs and sit on top of the £13,000 saving a typical pub will get from the 75% business rates discount. Hunt said this extension demonstrates the government’s support of “the great British pub”. 

Elsewhere, Hunt extended a 5p cut in fuel duty for another 12 months, which has been frozen at 57.95p since 2011, following a temporary drop of 5p in 2022. 

The chancellor said that these combined freezes will help reduce inflation by 0.2% over the period and help the government reach the Bank of England’s 2% target.

Hunt also stated that business investment this year will be 10.6% of Britain’s GDP and will continue to rise. 

To help boost continued investment, Hunt stated that the government will shortly publish draft legislation for full expensing to apply to leased assets, a measure to be brought in “as soon as it is affordable”.

Full expensing was introduced as a temporary measure at the last budget and will now become a permanent tax cut for businesses. 

Moreover, Hunt announced that he would abolish the current tax system for non-domiciles and replace it with a “fairer and competitive” residency system.

It will see non-doms pay the same level of tax as UK citizens after four years of residency, overall the chancellor said it will raise £2.7bn a year by the end of its initial period.

He also announced that from April the threshold for High Income Child Benefit Charge will be raised by £10,000 to £60,000, with the highest taper rising to £80,000.  He also announced plans to change the way the charge works turning it into a household calculation by 2026.

During his speech, Hunt noted that when he and the prime minister came to power inflation was at 11% and during their tenure it has since been brought down to 4%.  He claims the latest OBR data shows it will fall to below 2% in “just a few months time” nearly a year earlier than predicted in the Autumn Budget last year.

Furthermore, the OBR expects the economy to grow 0.8% this year and 1.9% next year with Hunt claiming the UK has “turned the corner on inflation”. 

Other measures announced included:

• Abolishing the £90 charge for obtaining debt relief order, with the move to affect around 40,000 families.
• The introduction of a “brand new British ISA” that will reportedly allow for an additional £5,000 for the public to invest “exclusively” in UK equity. 
• Filling around 900,000 vacancies across the country without the help of immigration. 
• Scrapping the multiple dwellings relief which makes it more profitable for second home owners to let out their properties to holiday makers, rather than to long-term tenants to rent. 
• Nearly £6bn of additional funding for the NHS to help digitise the service, including £2.5bn to help the health service “meet pressures in the coming year” and £3.4bn to replace outdated systems.