SPRING BUDGET 2024: Will Hunt move on income tax or National Insurance, inheritance tax or stamp duty?

As Jeremy Hunt prepares the landmark financial statement that he will deliver on Wednesday 6 March, the last set of major macroeconomic indicators before Budget day are emerging this week.

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Published: 14 Feb 2024 Updated: 14 Feb 2024

The Chancellor of the Exchequer has three weeks to go until a hotly anticipated spring Budget. As Jeremy Hunt prepares the landmark financial statement that he will deliver on Wednesday 6 March, the last set of major macroeconomic indicators before Budget day are emerging this week.

Inflation came in lower than expected today and is expected to fall further over the coming months, which means Mr Hunt can argue that any tax cuts he has in mind do not present an inflationary risk. Along with growth figures tomorrow that are expected to be weak, the benign price data opens the door to interest rate cuts from the Bank of England in the coming months.


That is likely to ease government borrowing costs in forecasts by the Office Budget Responsibility – as well as provide some relief to households facing heightened borrowing costs. 


Households will watch the spring Budget keenly for any changes to taxation and benefits that could give a boost to their own financial outlook after years of uncertainty, stretched disposable incomes and languishing living standards.  And many of Mr Hunt’s Conservative colleagues will watch from the back-benches with hawk-like scrutiny for the tax cuts that many of them believe are necessary for their party to have a fighting chance in the General Election that will be held this year. 


Sian Steele, Head of Tax at professional services and wealth management group Evelyn Partners, comments: “Budgets are inevitably political affairs but this one is more so than most as it’s seen as something of a last-chance saloon for the Chancellor and his colleagues in Government to start winning back the electorate. 


“The Government could squeeze in an Autumn Statement before an election, but the feeling is that, if the aim is to make the UK’s households feel better off and more optimistic, then the spring Budget is the time to act. 


“Mr Hunt will have a better idea today of how much fiscal headroom he has for crowd-pleasing tax cuts, as the OBR is presenting him with its ‘second round’ of economic forecasts and public finance estimates. The Treasury was recently reported as suggesting Mr Hunt will have just £14billion to play with – and the Chancellor himself has played down the prospect of tax cuts.   


“But thanks in part to wavering inflation, growth and interest rate forecasts, estimates of the public finances have been subject to frequent revision recently. The final out-turn from the OBR will determine what sort of tax cuts we see – as there are sure to be some.  


“Greater fiscal headroom will make an eye-catching cut to income tax or National Insurance more feasible and tempting, while if there’s less to play with, the Chancellor’s attention might turn to less expensive targets like stamp duty land tax and inheritance tax.” 


Income tax and National Insurance 


Steele says: “It seems that a further National Insurance cut is emerging as the frontrunner for a big Budget tax announcement. This would enable the Government to again to present the tax cut as focused towards incentivising work, more so than a move on income tax which would benefit a wider range of the population, including pensioners.” 

One report has predicted a further penny off class 1 NICs, to follow the 2p cut that was announced in the Autumn Statement and enacted in the New Year. It’s thought that would cost about £5billion, as opposed to a possible £7billion for a penny off the basic rate of income tax. 

Steele adds: “Nothing defines a Tory Chancellor, however, quite like a Budget income tax cut.  

“In his 2022 leadership campaign the Prime Minister promised to reduce the basic rate of income tax, so such a move from the Chancellor cannot be ruled out. But the fairer and in many ways more logical move would be to raise the personal income tax allowance or the threshold for the higher rate band – even if a freeze was then reintroduced for subsequent years as planned until 2027/28.” 

Under current plans the personal income tax allowance – below which an earner pays not tax - will remain at £12,570 for the tax year that begins this April, and the higher rate tax threshold £50,270.  

The personal tax allowance was last raised from £12,500 to its current level in April 2021: if it had been raised in line with the consumer prices index it would now stand at more than £15,000. Likewise, the higher rate tax threshold which was last raised from £50,000 to its current level in April 2021 would now be about £60,000. 

Steele says: “This is drawing huge numbers of additional people into paying 40 per cent tax on some of their earnings: the OBR estimates that between 2022-23 and 2028-29 the threshold freeze means 3million more earners will have moved to the higher rate. HMRC said in September that there are a projected 5.6 million higher rate taxpayers in this tax year (2023/24), which is a 40.7 per cent increase compared to 2020/21.[2] 

“It is possible that, if there is going to be a big tax reveal, the Chancellor will make a direct appeal to voters by raising the higher-rate threshold. Not least because this could be presented as correcting the aberration of a threshold that has been kept artificially low, rather than an arbitrary giveaway.” 

Inheritance tax 

Steele says: “A move to reduce inheritance tax could be on the cards at the spring Budget, having failed to materialise at the Autumn Statement after months of kite flying for such a move and enthusiasm on the Conservative backbenches. But while a move on IHT would send a clear signal to the electorate, the immediate financial feelgood factor might be limited. 

“There was much speculation before the Autumn Statement that the 40% rate would be halved, and this speculation has reappeared, but families with more modest estates that are being drawn into the IHT net would probably rather see the nil-rate band raised. The £325,000 allowance has been frozen since April 2009 and would now stand at nearly £500k had it risen with inflation. 

“As an IHT cut would do little to improve households’ financial situation this summer, it’s perhaps more likely that a pledge will feature in the Conservative manifesto – particularly as it might appeal to and motivate some of the party’s core voting demographic.”  

Stamp duty land tax and first-time buyer help 

Changes to stamp duty land tax relief are still due to be reversed from 31 March 2025, and pressure on the Government to make the changes permanent has grown.  

Steele says: “A flagging housing market and a sluggish electorate could well prompt the Chancellor to look at extending stamp duty reliefs at the Budget. At a minimum, that’s likely to mean making the current extensions permanent – but could also take the form of further extensions to reliefs or a reduction in the rates of SDLT. 

"However, the property market is holding up rather better than expected in the face of raised interest rates, so that might lessen the likelihood of an SDLT cut.”  

At the moment, the changes introduced by Kwasi Kwarteng’s mini-Budget of September 2022 mean that home-buyers start paying SDLT at a property price of £250,000 rather than £125,000, and at £425,000 for first-time buyers rather than £300,000. For properties between £425,000 and £625,000, first time buyers can claim relief and pay 5% of the part of the property value that’s above the £425,000 threshold.,. 

IFS chief Paul Johnson has stated quite boldly that he thinks SDLT is in dire need of reform and that abolishing it in part or in whole – at a cost of between roughly £4.5billion and £9.0billion - could mobilise the housing market and help to revive the UK economy.   

Housing secretary Michael Gove has said he is pressing hard for measures on housing affordability to be ­in the Budget - ­including a cut to stamp duty, state-backed 99% mortgages and an extension of a discount scheme for first-time buyers.  

Steele adds: “The perception in some quarters that SDLT has become a rather troublesome ‘stealth tax’ has made it unpopular among both potential and actual homebuyers. Also, it has come under increasing criticism for congesting the property market and even damaging UK business by restricting labour market mobility.”  

Capital gains and dividend tax allowances 

Could the Chancellor relent on the further cuts to the capital gains tax annual exemption and the dividend tax allowance that will kick in this April? 

Steele says: “These allowances were already halved in April 2023, from £12,300 to £6,000 in the case of the capital gains exemption, and £2,000 to £1,000 for dividends, which was quite a radical change for investors in itself. 

“The two allowances are due to be halved again in April to £3,000 and £500 respectively, which really does redraw the tax landscape for investors and people who run their own business compared to a couple of years ago. 

“It’s fair to say Mr Hunt was in a very different place when he set these policies in train at the 2022 Autumn Statement in the aftermath of the Truss-Kwarteng mini-Budget, so he could be reassessing the further cuts to these allowances that are due in April, although the Budget does take place very close to the start of the next tax year.” 

Personal savings allowance

Steele says: “Despite the rapidly spreading impact of the frozen personal savings allowance on the UK’s savers, it has not yet featured in Budget speculation. But it is a source of growing frustration for many savers. 

“Even basic rate taxpayers with a £1,000 allowance for savings interest could breach the PSA at an interest rate of 5% with savings of more than £20,000 held outside an ISA. But the £500 for higher-rate taxpayers and zero allowance for additional rate earners mean that hundreds of thousands are starting to pay tax on savings,”  

HMRC expects about 2.73million people to pay tax on their savings interest in the current tax year, including 1.37million basic rate taxpayers.[3] That’s a rise of around a million overall on the 2022/23 tax year, while in 2020/21 fewer than 800,000 savers paid tax on their savings interest.  

Tourist tax 

Liz Truss and Kwasi Kwarteng reinstated VAT-free shopping for overseas tourists in their ill-fated mini-Budget of September 2022 – and many retail, hospitality and travel businesses wish Jeremy Hunt had not jettisoned the policy in the volte-face Autumn Statement that followed.  

The Chancellor has asked the OBR to examine whether the policy’s withdrawal at the start of 2021 has actually resulted in gains for the Treasury, or has had the opposite effect thanks to its drag on tourist spending and the wider economy. 

Heathrow has thrown its weight behind demands to scrap it and has accused PM Rishi Sunak of “shutting the door” on domestic growth with his decision during the pandemic - when he led the Treasury in Boris Johnson’s Government - to withdraw VAT-free spending for visitors from overseas.  


[1] https://obr.uk/box/fiscal-implications-of-personal-tax-threshold-freezes-and-reductions 

[2] Summary Statistics - GOV.UK (www.gov.uk) 

[3] FOI request from AJ Bell