Lovewell Blake Spring Budget reaction 2024

James Shipp
James Shipp Lovewell Blake Spring Budget 2024 reaction

Those expecting a buccaneering pre-election Budget from Jeremy Hunt will be feeling rather let down: this was a modest affair, full of measures which had been pre-briefed, and without even the traditional rabbit pulled out of the hat to please his own backbenchers.

James Shipp Lovewell Blake Spring Budget 2024 reaction

The headline (and much signposted) 2% cut in employee National Insurance for those earning up to £50,270 - the higher rate remains unchanged – will make a small difference to the take-home pay of those in employment. 

It will also once again cause business owners who draw their income from their companies via dividends to take a long, hard look at whether they should instead be drawing more of their earnings via salary.  Although the fact that employer contributions remain at the much higher rate of 13.8% may tip the balance in favour of continuing to take dividends, especially when you consider the cashflow implications of paying tax on salaries monthly via PAYE. 

Many will welcome the raising of the threshold beyond which parents lose child benefit to £60,000, and the stretching of the taper window from £10,000 to £20,000, but this move does not in any way solve the inherent unfairness of the measure for single income families.  

In fact, it exacerbates that unfairness, as a household with two parents earning £60,000 each, who would previously have lost their entire child benefit entitlement, will now receive it in full; meanwhile, a single income household earning £80,000 will receive nothing.  Promises to consider household income in future would provide more fairness, but will be difficult to implement and will not happen unless the election goes the way of the government. 

The move will also considerably complicate tax planning, as up until now £50,000 has been a single threshold for higher rate income tax as well as the child benefit taper.  Now there are several thresholds, which does nothing to simplify the system. 

The elephant in the room which wasn’t mentioned in the Chancellor’s speech is fiscal drag.  The freezing of personal allowances and tax bands continues to pull more people into taxation, and more into paying higher tax rates.  If the government hopes that people won’t notice this considerable ‘stealth tax rise’, they are set to be disappointed. 

The main surprise in Jeremy Hunt’s Budget was that there were no surprises, and no real theme, either.  At this stage in the electoral cycle we may have envisaged something spectacular; instead, it was rather thin and uninspiring fare. 

Read our full Spring Budget guide.

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