“Lower taxes mean higher growth” – that was the slogan. Ignoring whether that is right or wrong – and there are millions of pages written on the matter – does it ring true and is that the right premise?

In the plus column, the Chancellor has significantly reduced the tax burden on workers. Over the last few months, he has cut national insurance by 4%. This is a saving for those paying the most tax of around £1,500 a year. 

The Chancellor has also finally listened to the calls of families to do something about child benefit – raising the threshold to £60k from £50k and halving the speed by which the benefit is clawed back.  And don’t forget, in the Autumn statement, just a few months ago, the Chancellor introduced full expensing for businesses – a tax cut touted as being worth £10billion for businesses that invest in qualifying plant and machinery. 

And … there are promises of more. Employees’ national insurance to be reduced to nil and child benefit to be measured on household income. If (!) this happens, it could help millions of people and families. 

But … what about the ‘negative’ column. Well, corporate taxes remain historically high, VAT is at 20%, thresholds for income tax and national insurance have been frozen for years, meaning that taxpayers pay higher taxes on the same earnings and, despite the rumblings from Government, IHT remains.  

And that’s before we get to the big ones!

The concept of the FHL (furnished holiday letting) is to be abolished. For those that run these businesses, this will come as a big shock.

They will no longer be able to claim capital allowances or, critically, full relief for interest on their debt if they are higher or additional rate taxpayers.  The Government hopes that this ‘fairness’ will mean more homes being available for local families.  

And … non-dom is dead. In its place we have a new regime – what shall we call those that qualify ‘Figgers’ perhaps?  Actually, for short term residents in the UK, the new regime seems like excellent news – they will be exempt from tax on any income or gains that arise outside the UK, even if they use that money in the UK.  But, should you stay more than four years, or be the settlor of a non-UK trust, you are likely to be taxed far more heavily than you have been in the past, as you will be taxable on your worldwide income and gains.  

Interestingly, the Government has decided to adopt a policy of reform in other areas too, most notably the NHS (although other departments are involved too).  The plan is for every £1 spent on reform – which is broadly the introduction of better technology – it aims to deliver £1 of savings through reduction in admin time of public servants.    

We all know this is an election year. We also all know that whilst political parties try and encourage us to vote for them through espousing their virtues and policies, they also unashamedly try to buy our votes. To win us over, the conservatives seem to be doubling down on the British worker and trying to cut Labour off at the knees on some of their favoured hobby horses, whilst asking businesses to trust them with the premise that your taxes may be high…but they will be worse under that lot. Will it work? Time will tell – but how much time? Labour wants to run now – and who can blame them – but the Conservatives seem to be planning yet a further Autumn Statement in advance of the election.  In any event, the season will soon be upon us. In the meantime, the British worker will be better off and everyone else will feel the pinch.  And for non-doms, a period of uncertainty and probably extensive planning is ahead.  

Click the button below to read Gravita’s full commentary of the UK Government’s Spring Budget 2024.