National Insurance, non-doms and alcohol: Hunt sets out spending plans in his Budget

Jeremy Hunt set out his spring Budget on Wednesday, ITV News' Deputy Political Editor Anushka Asthana reports

Jeremy Hunt has cut National Insurance by 2p as he laid out his plans for taxation and spending in the spring Budget.

That means the average worker on a £35,000 annual salary will save around £450 a year.

The chancellor also announced he would be scrapping the non-dom tax status, which was previously one of Labour's key promises.

The budget watchdog the Office for Budget Responsibility said despite Mr Hunt's national insurance cuts, tax as a share of GDP is “rising to near to a post-war high”.

Sir Keir Starmer branded the chancellor’s budget “the last desperate act of a party that has failed”.

The Labour leader said despite the National Insurance cuts announced by the chancellor, the UK still has "the highest tax burden for 70 years".

In an interview with ITV's Political Editor Robert Peston, the chancellor suggested there would be no cuts to income tax this year, despite Rishi Sunak previously promising them.

He described the cut to National Insurance as "a big, big over delivery for people in work".

Mr Hunt also told the Peston programme he always thought non-dom tax breaks were wrong: "I always thought that it was wrong to have a system where someone who's very wealthy can write a cheque and not pay the same taxes as other people who live here", he said.

Here's a rundown of the chancellor's announcements:

National Insurance cut

The chancellor has announced he will cut National Insurance by 2p, from 10 per cent to 8 per cent.

This will save someone on a £35,000 annual salary around £450 a year.

National Insurance is paid between the age of 16 and state pension age.

Employees currently pay 10 per cent of earnings between £12,570 and £50,270 towards National Insurance.

That was reduced from 12 per cent by Jeremy Hunt at the Autumn Statement last year, but the £12,570 threshold for when you start paying is frozen until 2028.

The tax cut is seen as a way of rewarding people in work, and boosting the labour market.

The 2p cut in National Insurance will cost the government around £10 billion a year.

National Insurance tax raises money for the Treasury to pay for certain benefits like the Jobseeker’s Allowance, and the state pension.

National Insurance is also changing for self-employed people - from 6 April 2024 they’ll pay 8 per cent on profits between £12,751 and £50,270, down from nine per cent.

They will also no longer pay Class 2 National Insurance contributions - the government says this will be worth £350 a year for a self-employed person earning £28,000.

Fuel and alcohol duty

The chancellor confirmed he will extend the freeze on fuel duty for a further 12 months, and extend the freeze on alcohol duty until February 2025.

The cost of fuel rose after Russia invaded Ukraine in 2022, and the average UK petrol price rose by 4p this February, which is the biggest monthly rise in five months, according to RAC figures.

Alcohol duty is charged on drinks which have over 1.2 per cent of alcohol.

It had been due to run out in August 2024.

Watch ITV News' Editor Joel Hills analyse the Budget:

Oil and gas windfall tax

The windfall tax on oil and gas companies will be extended until 2029.

Mr Hunt says this will raise £1.5 billion.

Rishi Sunak introduced the 25% Energy Profits Levy when he was chancellor in May 2022 - after oil and gas companies were recording massive profits.

In the first year of the scheme it raised an extra £2.6bn for the UK government.

Some Conservatives are unhappy about the extension of the windfall tax, including leader of Scottish Conservatives Douglas Ross and Energy Minister Andrew Bowie who fear it will put jobs in the north east of the country at risk.

Scrapping the non-dom tax status

The Chancellor has scrapped the non-dom tax status, which allows foreign nationals to live and work in the UK for 15 years without having to pay tax on their earnings on capital held abroad.

The PM’s wife Akshata Murthy was a non-dom, although volunteered to pay UK tax on her global income after media scrutiny.

Abolishing the non-dom status creates a problem for Labour - as it was one of their key policies they planned to use to fund spending commitments.

Shadow Chancellor Rachel Reeves told ITV's Peston programme that "imitation is the sincerest form of flattery", and the Conservatives have taken Labour's policy on non-doms "lock, stock and barrel".

Child benefit

Mr Hunt has increased the income level at which people start being charged for receiving child benefit.

As a pitch to middle-income families, the chancellor has changed the threshold at which people start paying the child benefit charge from £50,000 to £60,000.

Currently, higher earners pay the charge on child benefit once they earn £50,000 - so people pay back one per cent of their child benefit for every £100 they earn over the £50,000 threshold.

Once you earn £60,000 the amount you pay in charges cancels out the amount you gain in child benefits - but Mr Hunt has announced this will change to £80,000.

Money Saving Expert Martin Lewis said the current policy “unfairly penalises single-income families”, because while one parent on £60,0000 a year loses the full amount, two parents on £49,000 a year get to keep everything.

Mr Hunt said "nearly half a million families with children will save an average of around £1300 next year" with these new thresholds.

VAT registration threshold

The chancellor announced he will increase the VAT registration threshold from £85,000 to £90,000 on April 1.

This will cut taxes for many small businesses.

Holiday lets

The Chancellor has scrapped tax breaks for owners of holiday lets.

Properties being rented out for holidaymakers are currently subject to extra tax reliefs on the costs of furnishing the property.

This will raise the Treasury around £300m a year.

It's hoped this will encourage landlords to rent to local people, making more homes available in places like Cornwall and the Lake District.

Flights

The government will increase air passenger duty for non-economy travel, which would mean a rise in business class ticket prices.

The current duty for business class passengers is £13 for domestic flights, £26 for up to 2,000 miles, £191 for up to 5,500 miles and £200 over that.

It raises around £3.8 billion a year.

Tobacco tax and vaping tax

A tax on vapes will be introduced, along with an increase in tobacco duty to keep vaping as a cheaper alternative to smoking.

VAT is applied to vapes, but unlike tobacco they do not currently have a separate levy.

The tax will apply to the liquid in vapes, with higher levels of tax for products with more nicotine.

The Treasury expect to raise more than £500m a year by 2028-29 between the vaping tax and the increase in tobacco duty.

Public sector funding

The chancellor announced a £2.5 billion top up of funding for the NHS.

He also announced a "Public Sector Productivity Plan” to make public services more efficient.

The chancellor revealed an £800m funding package to reduce public sector “waste” last week.

There had been reports he would cut the money allocated for public spending after the election - but that will now increase as planned by one per cent, rather than being cut to 0.75 per cent.

Household Support Fund

The chancellor also said he will extend the Household Support Fund for another six months.

Grants from the fund have been awarded to struggling families to help pay for food, heating and other essentials. Mr Hunt said he would continue to support families because "the battle against inflation is still not over”

The scheme had been due to end in March.

Levelling up

The chancellor announced a number of measures on levelling up.

They include a devolution deal for the North East worth £100 million, and devolution for Buckinghamshire, Warwickshire and Surrey.

He also announced £15 million in new funding to the West Midlands Combined Authority to support culture, heritage and investment projects.

On top of this there was £5 million for renovating village halls along with £300 million for Scotland, £170 million for the Welsh government, and £100 million for Northern Ireland.

Great British ISA

The chancellor has announced a new tax free savings account for investing in British stocks.

The British ISA will seek to boost the UK’s struggling stock market and will allow £5,000 investments in UK firms, on top of existing ISA allowance.

Mr Hunt had planned to announce the British ISA at the Autumn Statement last year, but the plans were shelved.

Hunt and Starmer mock each other

Among the economic announcements, the chancellor also found time to poke fun at Keir Starmer and Shadow Chancellor Rachel Reeves.

Mr Hunt raised comments made by Peter Mandelson, who said Keir Starmer could “shed a few pounds” - “if he wants to join me on my marathon training he’s most welcome”, he said.

“Ordinary families will shed more than a few pounds if that lot get in”, Mr Hunt joked.

He also accused Ms Reeves of “acting like a Tory” as he announced funding for the arts.

Mr Hunt also mocked Labour's Deputy Leader Angela Rayner, amid allegations she failed to pay tax when she sold her home.

It came as he announced he was scrapping relief for people who buy multiple properties - "I see the deputy leader of the Labour party paying close attention, given her multiple dwellings", he said.

Keir Starmer responded with his own joke about the chancellor when it was his turn to speak, comparing his marketing strategy to that of the "Wonka experience in Glasgow".

He was referring to a children's Wonka experience event which turned out to be a disaster despite slick AI generated marketing.

Have you heard our podcast Talking Politics? Every week Tom, Robert and Anushka dig into the biggest issues dominating the political agenda…