What The 2024 Spring Budget Means For You

Managing Your Money / Cost of Living Help

There were a lot of changes announced in Jeremy Hunt’s Spring Budget this afternoon. Find out what this could mean for your household. 

National Insurance cuts

In today’s Budget Jeremy Hunt announced that the rate of National Insurance Contributions (NICs) paid by workers will fall by 2% from 6 April 2024.  This means employees will now pay 8% instead of 10% on their annual income between £12,570 and £50,270 and self-employed workers will pay 6%, down from 8%. 

The government expects an employee on an average wage of £35,400 will increase their take home pay by over £450 in 2024/25 due to the reduction in NIC rates. However, freezes to personal allowances could mean that some of this benefit is reduced if people move into higher tax brackets through pay rises or moving jobs. 

Child Benefit changes

From 6 April 2024, the threshold at which Child Benefit starts to reduce will rise to £60,000 and the upper earnings limit will rise to £80,000 when Child Benefit will be no longer paid.

At the moment, people who earn over £50,000 a year have to repay some or all of the Child Benefit they claim. This tapers until 100% of your Child Benefit needs to be repaid when you earn more than £60,000 a year. This is known as the High Income Child Benefit Charge.

If you stopped claiming Child Benefit because you or your partner’s earnings were too high, you could now qualify to apply for Child Benefit. From April, that is worth £25.60 a week for your eldest child and £16.95 for other children.

Household Support Fund extended

The government has extended the Household Support Fund for another six months from April 2024. This was due to end in April 2024, but will now be available until September.   The Household Support Fund can be claimed in England to help people with everyday expenses like bills, clothing or transport costs. 

You can apply for the Household Support Fund through your local council. If you don’t live in England you can still access help through schemes like the Discretionary Assistance Fund (DAF) in Wales, or Finance Support in Northern Ireland.

Cost of Living payments

There were no plans announced to extend Cost of Living payments in 2024 to 2025 but people on certain working age benefits, including Universal Credit, will see their payments rise by 6.7% between April and September 2024. That is about £470 extra a year on the average Universal Credit payment.

New Budgeting Advance terms

From December 2024 the repayment period on new Budgeting Advance loans taken out by claimants on Universal Credit to cover essential expenses will increase from 12 months to 24 months, making monthly payments lower.

If you are already paying back a Budgeting Advance or you take one out before December 2024, you will still need to pay it back within one year.

Debt Relief Order fees waived

In England and Wales, if you have unmanageable debt and are on a low income, a Debt Relief Order (DRO) can write off your debts and help you get back on track. 

To encourage more people to tackle debt problems, the government is waiving the £90 fee it costs to access a DRO from April 2024. This means setting up a DRO will be free if you’re eligible.

From 28 June 2024, the amount of debt a DRO can include rises from £30,000 to £50,000 and you will be able to keep any motor vehicles worth up to £4,000. 

New savings account and ISA

Jeremy Hunt announced two new savings accounts in today’s budget, British Savings Bonds and the UK ISA. British Savings Bonds will be offered by National Savings and Investments (NS&I) from April 2024 and will be a 3-year fixed interest account. 

The UK ISA is designed to encourage people to invest in UK companies. It doesn’t have a release date yet, but if the consultation goes through you could increase your annual ISA limit by £5,000 a year on top of the existing £20,000 limit if you choose to open one.

Fuel and alcohol duty frozen

The current level of duty on petrol and diesel will be held until at least March 2025, and alcohol duty will stay at the same rate until February 2025. 

New tax on vapes

From October 2026 there will be new taxes on vapes and vape liquids. Taxes on cigarettes and tobacco will rise at the same time. 

Free childcare hours extended

The extension of 15 hours free childcare to two-year-olds  was announced in the Autumn Statement and will start from April 2024 for working parents and carers in England.   From September 2024, this will be extended to include babies from 9 months old.  

Parents of three- and four-year-olds already receive 30 hours free childcare and the plan is to extend the 30 hours to all children under 5 by 2026. 

Lifetime allowance for pensions

The lifetime allowance will end in April 2024 and be replaced by new allowances. For most people, the lump sum allowance (LSA) will limit the tax-free cash you can get from your pension to £268,275. 

The lump sum and death benefit allowance (LSDBA) will limit the total amount of tax-free cash you can get in your lifetime and when you die to £1,073,100 in most cases. An overseas transfer allowance (OTA) will also apply if you transfer your pension abroad.  

Pensions ‘pot for life’

The government confirmed it remains committed to exploring a lifetime provider model or ‘pot for life’ for defined contribution workplace pension schemes in the long-term. It said that it will “undertake continued analysis and engagement to ensure that this would improve outcomes for pension savers and build on the foundations of reforms already underway.”

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