Pre Election tax changes announced
Chancellor Jeremy Hunt's Budget announcement included significant tax and spending changes that could affect personal finances. Here's a breakdown of key points:
- VAT: Threshold at which small businesses must register to pay VAT raised from £85,000 to £90,000 from April.
National Insurance (NI) Cuts: A reduction in NI rates for 27 million employees across the UK. Employees earning between £12,571 to £50,270 will see a decrease from 10% to 8% in April, resulting in savings for individuals.
Tax Threshold Freezes: Income tax thresholds have been frozen since 2021, leading to more people being pushed into higher tax brackets with any pay rise. This could result in 3.7 million more people paying income tax and 2.7 million entering higher tax brackets by 2028.
Child Benefit Extension: Child benefit thresholds have been increased to £60,000, benefiting 485,000 families, with changes aimed at household income rather than individual earnings by April 2026.
Cost-of-Living Support: No further cost-of-living payments were announced, but the Household Support Fund will be extended for another six months.
Fuel Duty Freeze: Fuel duty freeze will continue, saving motorists an estimated £50 next year.
Alcohol Duties & Taxes: Duties on tobacco products will increase to £2 per 100 cigarettes, while alcohol duty remains frozen. A new tax will be introduced in 2026 on Vape products based on nicotine levels. Vape products will continue to have lower duties compared to tobacco products.
New UK Isa: A new tax-free Individual Savings Account (Isa) will be introduced for up to £5,000, allowing savers to invest in British businesses.
Property Tax Capital Gains Tax: The higher rate of property capital gains tax will decrease from 28% to 24%.
- Furnished Holiday Lets: Tax breaks for owners of furnished holiday let properties will now be scrapped
- Stamp Duties: The stamp duty tax break when purchasing multiple properties in England or Northern Ireland to end in June
Non-Dom Tax Status: Non-domiciled tax status will be abolished from April 2025, potentially raising UK taxes for such individuals.
Benefit and Wage Changes: Benefits, including universal credit and the state pension, will rise by 6.7% and 8.5% respectively in April, along with an increase in the National Living Wage.
- Covid-era government loan scheme for small businesses has been extended until March 2026
- Performance and Creative Industry reliefs: Tax reliefs for touring and orchestral productions, which had to been due to end in March 2025, has now been made permanent
- Independent UK films productions with a budget of less than £15m will be given a new tax credit.
- "Windfall" tax on the profits of energy firms has been extended until 2029
- Air passenger duty for business class tickets are set to increase
These measures outlined in the Budget could significantly impact individuals' financial situations, with changes to taxes, benefits, and living costs affecting households across the UK.
