Spring Budget 2024 will be 6 March

UPDATED 17 JAN 2024

The pre-election Spring Budget will be held on Wednesday 6 March 2024, the Treasury has confirmed.

[REGISTER FOR OUR SPRING BUDGET SEMINARS]

The Spring Budget could be followed by a general election around May 2024, but that is by no means certain. A number of economic and political factors will be considered by the government in deciding the eventual date. 

It remains possible that an election could be held much later in the year to coincide with an Autumn Statement, or maybe even after an emergency Budget in the summer.

Technically, the latest date for a general election is 23 January 2025 (Dissolution and Calling of Parliament Act 2022, section 4).  (See also the General Election timetable from the House of Commons Library)

Tax cuts on the agenda?

With an election in sight, it is widely expected that the Spring Budget will see the announcement of tax cuts, particularly on Income Tax, Inheritance Tax (IHT) and Stamp Duty. The 2023 Autumn Statement has already announced cuts in National Insurance Contributions from 6 January 2024 and 6 April 2024.

According to the Institute for Fiscal Studies, even taking into account this NIC cut, the overall level of taxation will increase by more over this parliament than under any previous parliament since records began in the 1950s.

There is media speculation that the basic rate of Income Tax could be cut by as much as 2p, reducing the basic rate to 18%. Rishi Sunak has previously promised to reduce the rate by 1p. Speculation also surrounds the scrapping of IHT, but it is more likely that the 40% rate for estates worth more than £325,000 will be cut (by as much as half) with a future promise on abolition.

It is reported in The Times that Rishi Sunak’s advisors are discussing unveiling a 'five-year' tax-cutting plan.

One of the biggest issues for taxpayers has been the freezing of tax allowances until 2028, forcing via fiscal drag (inflation) more and more people to be paying tax or paying higher rates of tax. According to reports, this has created an extra 3 million calls to HM Revenue & Customs in 2022/23 compared to the previous year due to people being dragged into the tax system.

With inflation falling (3.9% in November) and a possible Bank of England interest rate cut (from 5.25%) in the spring, economic factors may give the Chancellor, Jeremy Hunt, more room to play with on tax cuts and a possible uprating of tax thresholds.

And even though inflation rose slightly in December to 4%, markets are still expecting the Bank of England to cut the base rate from its 15-year high, albeit not by as much as previously thought and the cut may be delayed until May or June 2024.

The Chancellor will be under pressure from Conservative party Members of Parliament to go further than just cutting income tax, and consider such measures as scrapping IR35 (the off-payroll rules) and maybe increasing the VAT registration threshold from £85,000 to, say, £100,000 or more.

A 6 March tax-cutting Budget will put pressure on the Scottish government, which has proposed increasing taxes from April 2024.  Will it have to reconsider its actions?

Read our Private Client Perspective on what may happen in 2024.

From a business tax perspective, 2024 will see the introduction of a single Research & Development tax relief regime and the making permanent of Full Expensing relief. Will a Spring Budget make changes to these policies?

From an election perspective, how will Labour respond to the Spring Budget? If it were to be able to form the next government, how will taxes change?

Labour party proposals

Should there be a change of government after the next election, with Labour having control, Shadow Chancellor, Rachel Reeves, has proposed the following reforms:

• Closing IHT exemptions for agricultural / farming land.
• Ending business relief which exempts shares in an unlisted company or a significant interest in a business.
• Scrapping or reducing business asset disposal relief, which allows people who own more than 5% of a company to sell their stake and pay a lower tax rate. This relief was actually introduced in 2008 by Labour when the late Alistair Darling was Chancellor.
• Possible cuts in the rates of Income Tax and NICs, but depending on the economic outlook improving. Reeves has also ruled out increasing the top rate of Income Tax.

The Shadow Chancellor has ruled out any introduction of a wealth tax, or increasing the rate of CGT on shares and property.

She has also said she will delay Labour's proposed £28 billion green investment pledge in order to maintain strict fiscal discipline.

Following the 2023 Autumn Statement in which the Chancellor announced the abolition of the pension lifetime allowance from 6 April 2024, Labour has said it would reverse this if it came to power.

At the January 2024 World Economic Forum in Davos, the Shadow Chancellor said that Labour wanted to lower taxes on “working people” as a priority, but only as public debt was falling, so that any tax cuts are responsibly funded. 

Making representations on the Spring Budget

Written representations can be submitted to HM Treasury in advance of the Spring Budget to comment on government policy or suggest new policies.

The representations portal will close on 24 January 2024.

Autumn Statement 2023

As a reminder, the Autumn Statement was on 22 November 2023. 

• Download Autumn Statement Summary (pdf)
• Download 2024/25 Tax Tables (pdf)

Finance Bill 2023

Draft Finance Bill 2023/24, based on the Autumn Statement, is progressing through Parliament.

National Insurance

The changes to National Insurance, which will take effect on 6 January 2024 for employees and 6 April for self-employed people, are being legislated through a separate Bill - The National Insurance Contributions (Reduction in Rates) Bill.

Further information

If you would like to discuss how these changes in tax policy may affect you and/or your business, please contact your usual Bishop Fleming advisor.

[Gary Mackley-Smith]