The Chancellor Jeremy Hunt is going to deliver a speech about the budget 2024, in which he hinted about cutting down the taxes.
Every year, the Chancellor of the Exchequer, who oversees the government’s finances, presents a Budget statement in the House of Commons. This statement outlines the government’s plans for taxes, as well as spending on public services like health, education, and law enforcement. The Office for Budget Responsibility, an independent body that monitors government spending, provides an assessment of these plans. After the Chancellor’s speech, Labour leader Sir Keir Starmer will respond, and then MPs will debate the contents before the government introduces a Finance Bill to turn the Budget proposals into law.
The government might actually cut National Insurance (NI) instead of income tax rates. There are reports that the chancellor plans to cut another 2p from NI. They already announced a 2p NI cut for 27 million workers in the 2023 Autumn Statement, and it took effect in January.
Self-employed NI rates are also set to drop in April. On the other hand, cutting income tax rates or canceling the tax freeze could be quite costly. The Resolution Foundation think tank estimates that cutting the main rate of income tax by 1p would cost £7bn.
Alternatively, the government could spend a similar amount by canceling the current freeze on the tax threshold or higher rates. The International Monetary Fund (IMF) and the Institute for Fiscal Studies (IFS) have both warned about the potential risks of cutting taxes. It’s definitely a topic that’s generating a lot of discussion and debate.
The government is expanding free childcare places in England starting in April, which is great news. The chancellor even acknowledged that the current child-benefit rules may be unfair.
Right now, if claimants earn more than £50,000, they lose some of their child support. But if both parents jointly earn more than £50,000, they still receive the full amount. The chancellor might raise the income threshold to address this.
And speaking of government actions, there’s a UK-wide ban on disposable vapes that has been announced. The government is even considering a new vaping tax. Vaping products already have value added tax (VAT), but unlike tobacco, they don’t have a separate levy. It’ll be interesting to see how these measures impact the vaping industry!
The UK economy entered a recession in late 2023, shrinking for two consecutive three-month periods. However, Bank of England governor Andrew Bailey suggested that the recession may have already ended. But despite potential growth, many households are still facing financial difficulties due to two years of increasing prices.
Budget 2023
Previously, The budget announced a rise in corporation tax from 19% to 25%, according to which companies earning more than £250,000 had to pay 25% from April. The limit of annual tax-free allowance for pension had been increased from 40 thousand to 60 thousand, while the limit of lifetime allowance had been abolished. Prime Minister Rishi Sonak and other ministers congratulated Jeremy Hunt on the budget speech.
On the other hand, Labor leader Sarkier Starmer said that due to the mismanagement of the Tory government, Britain had fallen behind other countries, Britain had become the sick man of Europe, the country’s economy needed major surgery.
Let’s see what the new budget that is to be announced today, holds for the UK.
