After the Chancellor’s Budget earlier in March, perhaps you are wondering how the big changes will affect you, but need a handy summary without the waffle?
In this blog, we walk you through a few of the key changes, how they will impact people in different situations, and, most importantly, what it will mean for you and your hard-earned cash!
What if I’m employed?
Some good news is that National Insurance has been cut, for both employed and self-employed workers.
Employees will see the rate of NI drop from 10% to 8% from 1 April 2024 for earnings between £12,570 and £50,270. This is on top of a further drop from 12% to 10% on 6 January, meaning the average worker (earning £35,000 a year) will save nearly £900 annually.
The legal minimum wage has also been increased from £10.42 to £11.44 an hour from April.
What if I’m self-employed?
Self-employed workers will see the rate they pay on annual profits between £12,570 and £50,270 drop from 9% to 6%. Class 2 National Insurance is also to be abolished from April 2024.
These changes will save the average self-employed person (again, on say £35,000 a year) over £800 annually.
Jeremy Hunt has said that he is “making progress” in his goal to abolish National Insurance completely, but only "when it's affordable and as long as we're able to do it without risking public services".
However, with a continued freeze on the Personal Allowance announced until April 2028 (which has remained at £12,570 since 2021/22 and increased by only £70 since 2019/20!), in real terms many workers will continue to feel the squeeze.
What if I’m a parent?
The Chancellor has confirmed that the Child Benefit rules, which require anyone earning between £50,000 and £60,000 and claiming the benefit to pay some of it back, will be amended.
Going forward, parents won't have to pay any of the Child Benefit back until they start earning £60,000 a year, and only lose the benefit entirely if they earn above £80,000. A consultation is also in the works to consider basing the Child Benefit eligibility on household income, rather than on individual income, by April 2026.
Also, at present all working parents in the UK are entitled to 30 hours of free childcare for children aged 3 to 4. From 1 April, this entitlement has grown to include 15 hours of free childcare for 2-year-olds.
These were some of the big headlines for workers in the 2024 Spring Budget, and many measures appear designed to ease the burden on workers trying hard to revive a post-COVID economy.
However, with the news that living standards are not expected to return to pre-pandemic levels until 2027-28, much more is still to do.
The next step
For more information, please contact Alex Farrand on a.farrand@uhy-manchester.com, or your usual UHY adviser.
