What does the Spring Budget 2024 mean for me?

The Spring Budget is a chance for the UK Government to update Parliament and the public on its economic plans. 

The plans are based on economic forecasts made by the Office for Budget Responsibility (OBR). The forecasts by the Office for Budget Responsibility (OBR) are made twice yearly and tell the UK Government whether it’s going to meet its own financial targets. Based on the findings, the UK Government will know what it can spend money on, and whether it needs to adjust taxes or borrowing to pay for it.

The Spring Budget was delivered by the Chancellor, Jeremy Hunt on Wednesday 6 March 2024 at 12.30pm.

The £90 fee to get a Debt Relief Order (DRO) will be scrapped from April 2024. Currently, those who want to apply for a DRO as a debt solution have to pay a one-off fee of £90 per person to the Insolvency Service. Increases to the debt level threshold and the maximum value of motor vehicles were also announced.

The Household Support Fund, due to end in March 2024, will be extended for another six months. This was introduced by the Government on a temporary basis to help people struggling with the cost of living. The Chancellor has committed another £500 million to ensure this fund can continue to support those who need it.

The Government also announced it will be increasing the repayment period from 12 months to 24 months on budgeting advance loans taken out by Universal Credit claimants. This means levels of total debt repayment will be lowered, which is welcome news to low income households. 

The limit on eligibility for full Child Benefit will be increased in April 2024 from £50,000 to £60,000 for the highest-earning parent, with a commitment to consult and look at this in more detail in the longer term. Currently, if the highest-earning parent in a household earns over £50,000, only partial Child Benefit will be paid. The changes announced are aimed at reducing unfairness and moving to a system based on household rather than individual incomes by April 2026. The rate of High Income Child Benefit Charge will also be tapered, so it is not withdrawn in full until individuals earn over £80,000.

National Insurance will be cut again from 10% to 8% from April 2024. National Insurance is a payroll tax, and therefore only benefits people who are employed and earning over £242 per week. This is in addition to the 12% to 10% reduction announced in November 2023 and will be worth about £450 a year for someone on a £35,000 full-time salary.

The higher rate of property capital gains tax will be reduced from 28% to 24%. This means the amount of tax paid on profits from selling property will be lower. 

The furnished holiday lets scheme will be scrapped. The scheme entitles tax breaks to owners of holiday let properties. This will raise £300m a year for the Treasury. The Chancellor explained this should make the tax system work better for local communities, ensuring locals can access to long-term rental housing in holiday destinations.

We were thrilled to hear the announcement about Debt Relief Orders (DROs) changes, an area CAP has long been campaigning on. This will have a hugely positive impact for low income households struggling with debt. We also welcomed the much-needed six month extension of the Household Support Fund to support low income households struggling with the cost of living. 

However, more still needs to be done. People across the UK are struggling to make ends meet. People are becoming trapped in debt due to their household incomes not covering the cost of essentials such as food and heating: 

• 28% of UK adults are skipping meals because of costs

• 1 in 10 are going without electricity or gas at least monthly

• Almost half of clients accessing CAP’s debt service are facing deficit budgets, where their income doesn’t cover their outgoings. 

No one should be going hungry or cold. People should have enough income from social security and wages to cover the basics and stop them being pulled into debt and poverty.