Jeremy Hunt has unveiled his Spring Budget, hoping to woo voters with a mix of tax cuts, freezes and levies ahead of the general election later this year.
The Chancellor claimed his Budget was “a plan for growth, fairness and opportunity” that would help the UK recover from the pandemic and level up the regions.
Mr Hunt announced a range of fiscal measures that will be rolled out over the next few years – but only if the Conservatives can secure another term in office and extend their 14-year rule.
National Insurance cut by 2p
In a bid to ease the tax burden on workers, Mr Hunt has announced a 2p cut to National Insurance contributions for employees that will come into effect from April 6. The chancellor said this was “the biggest tax cut for a generation”, as he faced pressure from Tory MPs to lower taxes that are at a historic high.
National Insurance contributions are paid by employees and the self-employed on their earnings, as well as employers. The amount paid depends on an individual’s salary.
A further 2p cut is worth around £450 a year for someone on a full-time salary of £35,000.
Cutting National Insurance is cheaper than cutting income tax. However, some Conservative MPs are sceptical that it will have a big impact on voters’ pockets and preferences.
Non-dom scheme scrapped but replaced with new regime
The Chancellor said the government would scrap the controversial non-domiciled tax status for wealthy foreign residents living in the UK.
He has effectively stolen the policy that Labour previously said they would implement if they came to power.
Mr Hunt said the change would make the system “fairer and more competitive”. But he said it would be replaced with a “modern residency system” that would still attract global talent and investment.
Child benefit threshold raised
The child benefit threshold has also been raised, the chancellor announced, providing more help to parents.
The high-income charge threshold will increase from £50,000 to £60,000 and the taper will extend up to £80,00.
He said the new rule will apply to collective household income rather than individually. Mr Hunt said he aims to introduce this by April 2026.
‘Great British’ ISAs announced
The chancellor said he intends to reform the ISA system to encourage more people to invest in UK assets.
“After a consultation on its implementation, I will introduce a brand new British Isa which will allow an additional £5,000 annual investment for investments in UK equity with all the tax advantages of other ISAs.
“This will be on top of the existing ISA allowances and ensure that British savers can benefit from the growth of the most promising UK businesses as well as supporting them with the capital to help them expand.”
This is intended to boost the UK stock market and the economy.
Currently, only around four per cent of pension funds invest in British assets.
Special vape tax
The Government will also introduce a new tax on vapes in a bid to discourage non-smokers from taking up the habit.
Mr Hunt told the Commons he was confirming “the introduction of an excise duty on vaping products from October 2026 and publishing a consultation on its design”.
But he said that because vapes “play a positive role” in helping smokers quit, there will also be a one-off increase in tobacco duty to ensure vaping remains cheaper than smoking.
Vaping products are currently subject to VAT at 20 per cent but, unlike tobacco, they are not also subject to excise duty.