What does the 2024 budget mean for brands?

Chancellor of the Exchequer Jeremy Hunt has set out the government’s budget plans, laying out a slate of changes that will affect businesses and workers across the UK.

The overarching message of Hunt’s Spring budget, which he announced to parliament today (6 March), was his belief that “lower taxes mean higher growth”.

The tax cut grabbing the most attention is the reduction in National Insurance, which will fall from 10% to 8% next month. Hunt claimed this will save the average worker £450 per year.

There was welcome news for the hospitality sector, in particular pubs, as alcohol duty was frozen until February 2025. The duty had been due to rise by 3% in August.

The 5p cut on fuel duty, which was due to end this month, has also been extended.

The Chancellor also declared his intention to give more assistance to small businesses. He increased the threshold at which businesses have to pay VAT from £85,000 to £90,000, something he claimed will reduce the “administrative and financial impact”.

In response to calls from the City and the UK’s “high growth sectors”, Hunt decided to reform the Individual Savings Accounts (ISA) system designed to allow individuals to invest money in a tax-efficient way. Savers can currently invest up to £20,000 a year in ISAs. The government plans to introduce a new ‘British ISA’, that will allow an extra £5,000 to be invested.

The Chancellor claimed this change to ISAs will “ensure British savers can benefit from the growth of the most promising UK businesses as well as supporting those businesses with the capital to expand.”

He also announced measures designed to help the green energy and creative industries, recognising the latter’s role in stimulating tourism. These measures include £120m for a government fund set up to invest in green energy projects.

‘Back to work’ plan

Hunt also detailed measures designed to get people back into work.

“Those who can work, should,” he stated. “This is an issue that I’ve tackled in every budget and Autumn Statement I’ve delivered.”

The government says measures to get people back into work will help businesses fill roles and address job shortages without needing to rely on migration. In previous budgets, for example, the government announced measures to dissuade people from early retirement and encourage those with medical conditions to work.

Today, he turned to childcare and measures to help childcare providers deliver the government’s previously announced expansion of free childcare to 30-hours a week for children under five. Hunt claims this introduction will allow there to be “more people in work” in the UK.

In addition to tax cuts, the Chancellor also announced some duty and tax reforms affecting the tobacco, short-term rental and airline businesses. He introduced a new levy on vaping, designed to discourage non-smokers from taking up the habit.

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“Because vapes can also pay a positive role in helping people quit smoking, we will introduce a one-off increase in tobacco duty at the same time to maintain the financial incentive to choose vaping over smoking,” he stated.

The government has also been looking at property taxation and recognises the existing system makes it more profitable to rent out a property as a holiday let, like an Airbnb, than for the long-term to residents.

“To make the tax system work better for local communities, I’m going to abolish the furnished holiday lettings regime,” Hunt said.

The government is adjusting air passenger duty for non-economy flyers, “to account for high inflation in recent years”.

The Chancellor also announced he would be “abolishing” the non-domiciled tax regime. Non-dom tax status means an individual doesn’t need to pay tax on money made elsewhere. Hunt will reform the system to ensure the UK remains “competitive”, while insisting “those with the broadest shoulders pay their fair share”.

Lower inflation ‘didn’t happen by accident’

Unsurprisingly in an election year, Hunt was keen to trumpet the economic achievements of his government.

According to the Office for Budget Responsibility (OBR), inflation was 11% when Hunt and Prime Minister Rishi Sunak took office. It is now 4%, with OBR forecasts suggesting inflation will fall to 2% in the coming months.

“That didn’t happen by accident,” Hunt claimed.

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He also pointed to an increase in business investment as evidence the government is delivering on its promises. Business investment has risen from representing 9.3% of GDP during the Labour party’s time in government – which ended in 2010 – to 9.9% of GDP under the Conservatives, Hunt claimed.

He pointed to projections that this year business investment will account for 10.6% of GDP.

The Chancellor also reiterated claims the UK is on track to become an ecosystem for new technology, claiming the country has double the number of AI startups versus anywhere else in Europe.

“We are on track to become the world’s next Silicon Valley,” he added.