What was in the Spring Budget small print?

Chancellor Jeremy Hunt's Spring Budget 2024 has set out the government's plan to grow the economy and put more money in working people's pockets.

Hunt used his statement in the House of Commons yesterday (6 March) to talk through the most significant changes planned, but some details were buried in the small print of the official 'red book'.

Here, we've looked through the full document to find some of the changes that might not have made headlines, but could still impact your finances.

NS&I financing target raised

During his speech, the Chancellor announced the launch of a new three-year 'British Savings Bond' from the Treasury-backed provider National Savings & Investments (NS&I).

Hidden in the small print of the 'red book', however, is a mention that NS&I's net financing target will rise by £1.5bn to £9bn in the 2024-25 tax year. It currently stands at £7.5bn.

The target is used to pump up government funds and could impact the prize fund draw for Premium Bonds and interest on its other savings products. For example, if NS&I is struggling to meet its target, it could up rates to attract new customers.

• Find out more: What is National Savings & Investments?

Smoother payment of IHT

Current rules state that inheritance tax must be paid before you can apply for a grant of probate – proof that you have the legal authority to distribute the estate.

However, if you can't afford to pay all the bill, you'll need to obtain something called 'grant on credit' from HMRC. This lets HMRC grant probate on the basis that there is a method of payment agreed for the IHT.  

The government says from 1 April 2024, it will make the process of applying for grant on credit easier. It will do this by ending the need for representatives of estates to first seek commercial loans in order to pay the bill.

• Find out more: Inheritance tax rates, thresholds and who pays

Air Passenger Duty rates

The Chancellor briefly mentioned he will increase Air Passenger Duty (APD) for travellers who fly non-economy class, but the full Spring Budget document sheds more light on what it will mean for the cost of flights.

APD is a tax paid by customers when they book a flight and is calculated based on the distance travelled. On top of a planned increase this April, the Treasury says it is making 'a one-off adjustment' to duty to 'account for high inflation in recent years'.

Travellers in premium economy, business or first class will be hit hardest, with APD on a long-haul flight for this type of ticket rising by 12% from its current rate of £200 to £224 in 2025-26. 

For those in economy, rates for journeys further than 2,000 miles will see a total increase of £3 between now and 2025-26, but rates will remain frozen at 2024-25 levels for domestic or short-haul flights. 

Increase to VAT registration and deregistration threshold

If you're self-employed or own a business, the threshold for paying Value Added Tax (VAT) will rise from £85,000 to £90,000 from 1 April 2024.

VAT is a tax that traders charge to whoever is buying their goods and services. Business owners with turnovers higher than the threshold must register with HMRC and then hand the money over in a VAT return.

If your business is no longer eligible for VAT registration, you must apply to HMRC to 'deregister' – in other words, be taken off the list. The threshold for doing so will also be increased from £83,000 to £88,000.

For Northern Ireland, the registration and deregistration thresholds for acquisitions are the same – rising from £85,000 to £90,000.

• Find out more: Self-employed VAT returns

More details on benefits rise

The Chancellor confirmed that working-age benefits will increase by 6.7% – in line with September 2023's inflation figure – from 6 April 2024.

While this was already announced in November's Autumn Statement, the Treasury has provided more details in the small print. 

The document says the lift to benefits is 3.6 percentage points higher than forecast earnings for 2024-25 and the government claims it will 'help support the most vulnerable whilst inflation continues to fall'. According to the Treasury, 5.5 million households on Universal Credit will gain £470 on average in 2024-25.

• Find out more: Universal Credit explained

Inheritance tax for non-doms

Current rules allow an estimated 70,000 foreign nationals who live in the UK to avoid paying UK tax on their overseas income and gains. But yesterday, the Chancellor said the government is axing tax breaks for non-domiciled individuals – non-doms for short – and will introduce a new system.

From April 2025, new arrivals to the UK would not pay any tax on foreign income and gains for their first four years of UK residency, but after that, those who continued to live in the UK would pay the same tax as other UK residents.

However, the Treasury has yet to confirm whether these changes apply to inheritance tax (IHT) and could mean non-doms with overseas assets avoid paying the levy after the new rules come into force.

The full document states that while it is the government's 'intention' to 'move to a residence-based regime for inheritance tax', it will consult 'in due course on the best way to achieve this'.

It adds that, 'no changes to IHT will take effect before 6 April 2025.'

Investment in HMRC digital services

The government says it is putting more money into developing HMRC's digital services for income tax self-assessment customers. 

The details of what improvements will be made are currently vague. But the Treasury confirms it will involve simplifying access to digital services for customers who want to pay in instalments – in advance or in arrears – using a Time to Pay arrangement. This will be from September 2025.

Crackdown on tax avoidance firms

The government says it is doubling down on efforts to stop financial firms that promote tax avoidance. 

It says it is consulting on ways to make it harder for these agents to provide dodgy tax advice. This will be by both strengthening the regulatory framework in the tax advice market, and by requiring tax advisers to register with HMRC if they wish to interact with the tax office on a client’s behalf. 

Millions paying more tax

Despite the Chancellor's promise to lower taxes, the Spring Budget documents include predictions from the Office for Budget Responsibility (OBR) that show the current freeze on income tax thresholds will lead to millions paying more tax in the near future.

The process is called 'fiscal drag'. It means that if the levels workers start paying income tax from don't rise in line with inflation, more people end up being pulled into higher tax brackets when their wages go up.

The OBR says that by 2028-29, 3.7 million people will start paying the basic rate of 20% on their earnings. Another 2.7 million will be moved to the 40% higher rate and 600,000 will pay the additional rate of 45%.

OBR forecasts also show the overall tax burden is on course to reach the highest level since just after World War Two. 

• Find out more: UK income tax rates