Advertisement

Here Are the Key UK Budget Measures Announced by Jeremy Hunt

(Bloomberg) -- Jeremy Hunt’s UK budget decisions on Wednesday amounted to a pre-election giveaway that in the Chancellor of the Exchequer’s words “put this country back on the path to lower taxes.”

Most Read from Bloomberg

The Treasury estimates Hunt’s tax and spending measures will cost £13.8 billion ($17.6 billion) in total over the next tax year, during which Prime Minister Rishi Sunak must hold a general election that could see the governing Conservatives ousted from power after 14 years. They trail Keir Starmer’s opposition Labour Party by more than 20 points in several recent polls.

That perilous situation turned the budget into one of the Tories’ last chances to turn around their fortunes. Here’s a rundown of some of the key measures he announced on Wednesday, and the Treasury’s estimate of their annual cost, saving or income generated by the 2028-2029 fiscal year, unless otherwise stated.

Policy Measures

National Insurance: Hunt cut the payroll tax rates for employees and the self-employed by 2 percentage points, matching the reduction he made in November’s Autumn Statement. The move, which Hunt said will “grow our economy by rewarding work,” had been well trailed in advance, and Hunt also vowed to continue to reduce it “when it is responsible.” COST: £10.75 billion.

Non-Dom regime: The chancellor stole a Labour policy with a plan to abolish the current regime that allows wealthy foreigners to reside in the UK for as long as 15 years while being exempt from paying British taxes on their overseas earnings. Instead, from April 2025, new arrivals will not be required to pay tax on foreign income for 4 years. INCOME: £2.7 billion.

Oil & Gas Windfall Tax: Energy Profits Levy extended by a year to April 2029. INCOME: £1.2 billion

Fuel Duty: A 5p cut to the levy that was set to expire has been extended by a year. Hunt also maintained a freeze on inflation-linked increases. The freeze has been in place since 2011. COST: £840 million

Vapes, Tobacco: A new duty will be introduced on the so-called e-liquids used in vapes, while there will be a one-off increase in tobacco duty to ensure smoking remains less attractive than vaping. INCOME: £615 million

Alcohol: Alcohol Duty was frozen until February 2025. COST: £405 million

Air passenger duty: The levy on non-economy class flights will be increased from April 2025. INCOME: £140 million

Child Benefit: The threshold at which the benefit starts to be withdrawn is raised to £60,000 from £50,000, with the upper band at which all of the benefit is removed raised to £80,000. COST: £660 million

Property: Hunt lowered capital gains tax on the sale of second homes to 24% from 28%, a measure the Treasury estimates will generate more income in coming years — peaking at £350 million in 2025-26 — by increasing sales. He also abolished preferential tax rates for holiday lets — generating £245 million in 2028-29. Some £385 million will be generated that year by scrapping a relief on stamp duty for those buying two or more dwellings in a single transaction.

Creative Industries: Hunt announced a series of tax reliefs and credits for the visual effects and audio-visual industries, film studios, orchestras, theaters, museums and galleries. COMBINED COST: £370 million.

Business Taxes: The threshold at which small businesses must register for Value Added Tax was raised to £90,000 from £80,000. Hunt also extended his full-expensing investment tax relief to cover leased assets.

Other Announcements: The government reached agreement on a £160 million deal with Hitachi Ltd. to buy its Wylfa nuclear site. Hunt also announced a £650 million plan by AstraZeneca Plc to expand its footprint in Cambridge and build a vaccine manufacturing hub in Liverpool.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.