The UK Chancellor Jeremy Hunt today announced his Spring Budget 2024. In what may be his final intervention before a General Election, he announced a 2p cut to National Insurance rates, an extension to the freeze on alcohol duty, and reforms to pensions to encourage investment in UK businesses. The key announcements for Edinburgh businesses are summarised below.

The Office for Budget Responsibility forecast

• Inflation has now fallen to 4% and forecasts show that it will fall below the 2% target by the end of Quarter 2 of this year
• Debt as a proportion of GDP is expected to fall to 94% by 2028/29 and borrowing is expected to fall to 1.2% of GDP by 2028/29
• Growth of GDP is expected to reach 0.8% this year, 1.9% next year, 2.2% in 2026, then dropping to 1.8% in 2027 and 1.7% in 2028

Tax policies

• From the 6^th April there will be a 2p cut to the basic rate of employee and self-employed National Insurance
• A consultation will be launched later this year on fully abolishing Class 2 National Insurance.
• The VAT registration threshold will be increased from £85,000 to £90,000 from 1^st April
• The freeze on alcohol duty will be extended until February 2025
• Fuel duty will also remain frozen, with the 5p cut maintained for a further 12 months – this was something that the Scottish Chambers of Commerce called for ahead of the budget
• Various tax reliefs and credits will be given to the film and TV sector
• Permanent higher rates of tax reliefs will be set for theatres, orchestras, museums and galleries
• A new duty on vaping will be introduced from October 2026 and tobacco duty will also be increased from October 2026
• A one-off adjustment will be made to rates of Air Passenger Duty on non-economy passengers
• The Energy Profits Levy will be extended by an additional year to 2028-29
• The current tax regime for non-UK domiciled individuals will be abolished and replaced with a residence-based regime, where anyone who has been resident in the UK for more than 4 years will pay UK tax on their foreign income and gains. Transitional arrangements will be put in place for existing non-domiciled individuals
• Tax reliefs for green freeport sites are being extended until September 2034 in Scotland

Policies to increase growth and investment

• Building on the Edinburgh and Mansion House reforms to unlock pension capital, more powers will be given to the FCA and Pensions Regulator, a new UK ISA and British Savings Bonds will be launched, and the Government will bring forward requirements for Defined Contribution pension funds to publicly disclose the breakdown of their asset allocations, including UK equities
• The full expensing policy currently allows companies to deduct investment in IT equipment, plant or in full from taxable profits. The Government will now seek to extend full expensing to assets for leasing when fiscal conditions allow
• Up to a further £120 million will be provided for the Green Industries Growth Accelerator, to support the expansion of low carbon manufacturing supply chains across the UK
• A new £7.4 million upskilling fund pilot will be launched to help SMEs develop AI skills
• £45million has been promised to fund research on disease treatment.

The Scottish Government will receive around £295million through Barnett Consequentials from today’s budget.

Further comment and analysis will be shared in the coming days. As always, if you have any thoughts or feedback on today’s announcements, please get in touch with our policy team at policy@edinburghchamber.co.uk