Spring Budget 2024 predictions

What do we want from a Budget?

This is an interesting philosophical question. Our pre-Autumn Statement article requested, no begged for, consistency in policy making. But at a personal or business level what do we want? Do we want something that is right for us, our families, our businesses? Or do we actually want something that is right for the country, collectively.

(Spoiler alert – it’s a bit of both).

If we consider the Truss/Kwarteng announcements back in 2022, there are some economists who say that this is exactly what the country needed. There is no doubt though that the impact of the markets from that statement has significantly affected borrowing costs for us all individually.

Possible changes to VAT thresholds

Let’s look at VAT. The UK has a (relatively) very high registration limit of £85,000. If you sell to consumers and you can keep your turnover below this limit you will have a real competitive advantage compared to any business with sales above that amount. You are 20% cheaper.

Increasing the VAT threshold to, say £100,000, as the Federation of Small Businesses has suggested gives these businesses a real boost – for them this is a big benefit. Yet, there is a lot of detailed economic analysis that shows the VAT threshold acts as a real disincentive to increasing output. Businesses at that cusp just don’t take on more work – fewer shifts, turning down jobs.

This makes little sense for the country as a whole – economic activity is good; increased economic activity is better. Collectively, a lower VAT threshold makes sense – but not for those individual businesses, nor for private and most charity customers.

Taxation and Child Benefit

This flows across to personal taxation as well. The High-Income Child Benefit Charge kicks in at income £50,000 per annum; free childcare is withdrawn for those with income of above £100,000 per annum. The personal allowance starts to be withdrawn at this level of income too. All of this adds to the hideous complexity to the tax system, which HMRC have to police, and people are expected to understand and have to take account of. Employees turn down extra hours to stay below the various limits. This does not make sense.

Get rid of all of this complexity – make child benefit taxable but with a non-repayable tax credit of 20%. Allow everyone the full personal allowance, but increase the top rate of tax by 1% to cover it.

There used to be an advert (some 20 years ago now) which said, ‘tax doesn’t have to be taxing’. We heartily agree and hope the Government does too.

Your questions answered

The Spring Budget announcement will take place on Wednesday 6 March 2024. Following the announcement by the Chancellor, our panel of tax and business experts will be on hand to answer your questions during our Spring Budget question time webinar, highlighting key implications, and providing insights and guidance so you can adapt to the changes.

Watch our Spring Budget question time webinar

Following the Spring Budget, our panel of specialists examined the announcements made by The Chancellor, discussing what these changes mean for you. They also answered questions from our live audience. This webinar is now available to watch on demand here.