In a move with significant implications for UK workers, Chancellor Jeremy Hunt’s Spring Budget includes a 2p reduction in national insurance for millions, alongside other major fiscal adjustments aimed at boosting savings and ensuring high earners contribute their fair share.
Chancellor Jeremy Hunt has unveiled the Spring Budget, introducing a series of financial measures with significant implications for UK workers. Among the key announcements is a 2p reduction in national insurance for both employees and the self-employed, expected to benefit approximately 27 million people across the nation. This adjustment aims to provide savings for workers ahead of the upcoming general election, marking the lowest effective personal tax rate since 1975.
The Budget also addresses issues beyond national insurance. Despite the potential savings from reduced national insurance rates, income tax thresholds are to remain frozen until at least 2028. This freeze is projected to result in four million more individuals being subject to income tax and three million moving into higher tax brackets by 2029. However, the Budget proposes extensions of child benefit to families earning up to £60,000, potentially aiding around 485,000 households, and introduces a new British Isa to encourage tax-free savings directed towards UK businesses.
Other notable elements of the Budget include the continuation of the fuel duty cut, the implementation of new taxes on vaping products, and the abolition of the non-domiciled tax status for affluent foreigners. The latter is intended to ensure that high earners contribute their fair share, with the £2.7 billion annual revenue expected from this change directed towards tax reductions.
The Chancellor’s strategy also comprises a decrease in the top rate of capital gains tax on property sales and the scrapping of tax breaks for holiday let owners, among other adjustments. With these changes, the Treasury estimates significant savings for workers, with the average worker on a £35,400 salary potentially saving over £900 a year.
However, the cumulative impact of the Budget’s measures will vary across different income groups and individuals. While some stand to benefit from the changes, others, such as pensioners and those earning up to £19,000, may find themselves worse off, highlighting the complexities of the UK’s tax and contributions system.
