JMG-AD

Jeremy Hunt reduces national insurance in pre-election Budget giveaway

JEREMY HUNT COULD SQUEEZE THE WELFARE BUDGET WHILE CUTTING INHERITANCE TAX (HANNAH MCKAY/PA)
google news icon

Ahead of this year’s general election, Jeremy Hunt reduced personal taxes to their lowest point in nearly 50 years in a highly political Budget.

As the cornerstone of a budget designed to convince voters to support the Conservatives rather than handing power to Labour leader Sir Keir Starmer, the Chancellor confirmed a 2p reduction in national insurance for workers and independent contractors.

Mr. Hunt further proposed reducing the top rate of capital gains tax on property sales from 28% to 24%, claiming that this will raise revenue due to greater activity, and providing extra assistance with child benefits for parents making over £50,000.

But as he insisted those with the “broadest shoulders” will pay more, he committed to scrapping the non-dom status for wealthy foreigners, putting the £2.7 billion a year raised as a result towards tax cuts.

The national insurance cut from April will be worth an average £450 for workers and £350 for the self-employed.

When combined with a previous reduction which came into effect in January it will be worth £900 for 27 million workers and £650 for two million self-employed.

Mr Hunt said: “That means the average earner in the UK now has the lowest effective personal tax rate since 1975, and one that is lower than in America, France, Germany or any G7 country.”

But the changes come against a backdrop of frozen thresholds which will see more people dragged into tax or higher brackets as their earnings rise.

The budget watchdog said that, despite the national insurance cuts, tax as a share of gross domestic product (GDP) – a measure of the size of the economy – is “rising to near to a post-war high”.
The Office for Budget Responsibility (OBR) said the package of measures means Mr Hunt is meeting his rule of having national debt falling as a share of GDP in 2028-29 by a “historically modest margin” of just £8.9 billion.

The Chancellor told MPs that, by delivering on Prime Minister Rishi Sunak’s economic priorities, “we can now help families not just with temporary cost-of-living support but with permanent cuts in taxation”.

Mr Hunt said inflation is set to fall to below the Bank of England’s 2% target “in a few months’ time”, easing the cost-of-living squeeze.

But he also set out a series of measures aimed at offering “much-needed help in challenging times”, including:

– Changing the way child benefit is treated, with the individual earnings threshold at which it is taxed increasing from £50,000 to £60,000 from April, with people getting at least some help until they earn £80,000.

– Freezing fuel duty and extending the “temporary” 5p cut for a further 12 months.

– A freeze in alcohol duty to February 1 2025.

– Extending the Household Support Fund with an extra £500 million.

Mr Hunt also said GDP is set to grow faster than previously forecast by the budget watchdog.

The OBR forecast growth of 0.8% in 2024, up from the 0.7% forecast in November, and 1.9% next year – up from 1.4% on the autumn forecast.

Growth is expected to be 2.2% in 2026, again higher than previously expected, 1.8% in 2027 – a 0.2 percentage point decrease – while the forecast for 2029 remained unchanged on 1.7%.

“Because we have turned the corner on inflation, we will soon turn the corner on growth,” Mr Hunt said.

The Chancellor said he will maintain his plan to increase public spending by 1% a year over the course of the next parliament, although the OBR said the plans “imply no real growth in public spending per person over the next five years”.

Mr Hunt pledged to increase public sector productivity, including a package of NHS reforms which will “slash the 13 million hours lost by doctors and nurses every year” as a result of obsolete IT systems with a £3.4 billion investment.

He also promised an additional £2.5 billion for the NHS to “meet pressures in the coming year”.

Other changes to emergency services could include using drones as “first responders” to incidents “where appropriate”, as part of a £230 million plan to roll out new technology to speed up police response times, which could also allow victims to report crimes by video call.

The Chancellor confirmed he will replace the current non-dom tax regime with a “modern, simpler and fairer residency-based system”.

The move lays a trap for Labour which had promised to scrap the status and put the money into public services including the NHS, rather than directing it towards tax cuts as Mr Hunt has done.

For businesses, Mr Hunt increased the threshold at which small firms have to register for VAT from £85,000 to £90,000.

He also announced measures aimed at supporting investment in tech firms by unlocking pension fund investment.

And he confirmed a new British ISA will allow an extra £5,000 of tax-free investment in UK assets.

The Chancellor also offered more than £1 billion in extra tax breaks for the creative industries over the next five years.

Tax rises announced by Mr Hunt included a widely-anticipated levy on vaping from October 2026 and an increase in tobacco duty which will raise £1.3 billion by 2028/29.

He also announced the abolition of some property tax breaks, with multiple dwellings relief to be scrapped from June, raising £385 million a year, and the furnished holiday lettings tax regime abolished from April 2025, raising £245 million a year.

With the Tories trailing Labour in opinion polls by around 20 points, Mr Hunt took aim at Sir Keir’s party, saying voters face “a plan to grow the economy versus no plan, a plan for better public services versus no plan, a plan to make work pay versus no plan”.

But Sir Keir said the Budget was the “last desperate act of a party that has failed”.

Mzaad
Chancery-Solicitors-Ad-banner-v2-updated

Next Post

Chancellor has come under fire for 'A cut and paste budget’

Thu Mar 7 , 2024
Follow us on Google News to get latest news The chancellor has come under fire for allegedly creating a “cut and paste” budget that omits the tax adjustments required to save eateries and bars. The industry trade association, UK Hospitality, stated that Jeremy Hunt’s budget did not do enough to […]

You May Like

Subscribe Our Newsletter

Daily Dazzling Dawn is the first and only international and non-profitable newspaper, which is 100% ownership of professional journalists from Bangladeshi origin with 20 years of experience in global journalism. The main aim of the newspaper is promoting ethical journalism with truth, accuracy and proficiency.

Editor in Chief

Dulal Ahmed Chowdhury

Dulal Ahmed Chowdhury is the Editor of The Daily Dazzling Dawn. Previously, he has been serving in important positions in all the famous national dailies of the Bangladesh since the nineties. He has played a commendable role in journalism by participating in various events at the national and international levels. United Nations Conference, World Climate Conference, SAARC Summit are notable among them.

Quick Jump

error: Content is protected !!