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Jeremy Hunt Cuts National Insurance And Scraps Non-Dom Tax Breaks In Spring Budget

Jeremy Hunt announced the Budget in the House of Commons on Wednesday (Alamy)

6 min read

Chancellor Jeremy Hunt has announced a cut to National Insurance and abolished non-dom tax status in the Spring Budget.

Hunt told the House of Commons that from 6 April, employees’ National Insurance will be cut by 2p, from 10 per cent to 8 per cent, following a previous 2p cut in the Autumn Statement. Self-employed national insurance will be cut from 8 per cent to 6 per cent. Hunt said this would mean an additional £450 a year for the average employee or £350 for someone self-employed. 

“The way we tax people’s income is particularly unfair,” he said.

“If we are to build a high wage, high skill economy not dependent on migration…If we want to encourage people not in work to come back to work…We need a simpler, fairer tax system that makes work pay.”

The Chancellor has been under pressure from backbench Tory MPs to deliver tax cuts, as the government looks for ways to try to convince voters not to abandon the Conservatives in the general election. 

Many Tory MPs believe it is the government’s last chance to shift the dial, with a poll published by Ipsos UK on Monday suggesting that only 20 per cent of the public plan to vote Tory, the lowest Ipsos score ever recorded by the party.

The government will also abolish the current tax system for non-doms, which had been a long-trailed proposal by Labour that would have been central to their economic plans if they get into government at the next general election.

From April 2025, new arrivals to the UK will now not be required to pay any tax on foreign income and gains for their first four years of UK residency, but after four years, they will pay the same tax as other UK residents if they stay in the country. 

“Overall abolishing non-dom status will raise £2.7 bn a year by the end of the forecast period, money the party opposite planned to use for spending increases,” Hunt said.

“But today a Conservative government makes a different choice. We use that revenue to help cut taxes on working families.”

In other tax measures, Hunt confirmed the introduction of an excise duty on vaping products from October 2026 and a one-off increase in tobacco duty at the same time, as well as a one-off adjustment to rates of Air Passenger Duty on non-economy flights to account for recent high inflation.

Hunt also announced the extension of a range of measures to help households with cost of living pressures in the Spring Budget.

The measures aim to help people in debt, including increasing the repayment period for new loans and abolishing the £90 charge for getting a debt relief order. He also extended the Household Support Fund, which supports local councils to help families with food banks and vouchers, for another six months.

“Nearly one million households on Universal Credit take out budgeting advance loans to pay for more expensive emergencies like boiler repairs or help getting a job,” he said.

“To help make such loans more affordable, I have today decided to increase the repayment period for new loans from 12 months to 24 months.”

The Chancellor said the government’s plans would mean “more investment, more jobs, more productive public services and lower taxes” with the aim of long-term growth. 

“If we want that growth to lead to higher wages and higher living standards for every family in every corner of the country, it cannot come from unlimited migration. It can only come by building a high wage, high skill economy. Not just higher GDP, but higher GDP per head.”

Saying that he believed "we need a more productive state not a bigger state", Hunt announced the introduction of a Public Sector Productivity Plan that would change how the Treasury approaches public spending.

This would include doubling the amount the NHS is investing on digital transformation over three years, and introducing a range of measures to employ AI and update computer systems to improve productivity and fund improvements to help doctors read MRI and CT scans more accurately and quickly. The Chancellor announced an additional £2.5bn to "allow the NHS to continue its focus on reducing waiting times".

Hunt extended the freeze of alcohol duty from August this year to February 2025, which he said would benefit 38,000 pubs across the UK. He also said that the government would maintain the 5p cut and freeze fuel duty for a further 12 months. 

He also announced measures with the aim of supporting the creative industries, including a new tax credit for UK independent films with a budget of less than £15m and £26m of funding to the National Theatre to upgrade its stages.

In the Autumn Statement, Hunt announced that permanent Full Expensing would be introduced. On Wednesday, he said he would take “further steps to boost investment” in the Budget.

“Having listened to calls from the CBI and Make UK, we will shortly publish draft legislation for full expensing to apply to leased assets, a change I intend to bring in as soon as it is affordable. We will also help small businesses, something close to my own heart.”

He added that businesses not being able to hire the staff they need was one of the "biggest barriers" they were facing. He said the government would therefore guarantee the rates that will be paid to childcare providers to deliver the expansion of childcare services that was announced in the Autumn Statement.

"It would be easy to fill [employment gaps] with higher migration – but with over 10m adults of working age who are not in work that would be economically and morally wrong," he said.

"Those who can work should. This is an issue I have tackled in every budget and autumn statement I have delivered."

The Chancellor listed a number of areas where £100m of levelling up funding will be allocated, including High Peak, Dundee, Conwy, Erewash, Redditch, Coventry and a number of other areas. He said the Treasury would allocate £5m to renovate hundreds of local village halls across England.

Setting out the Office for Budget Responsibility’s (OBR) economic forecasts for the year, Hunt confirmed that they showed inflation falling below the 2 per cent target in a few months’ time. It was at 11 per cent when Hunt and Prime Minister Rishi Sunak started their current roles in 2022.

Responding to the Budget, Labour leader Keir Starmer said that "nothing they do between now and the election" would change the Conservatives' record on the economy. 

He said that the Tories were simply trying to "save their own skins" with the "desperate move" of announcing the end of the non-dom tax status, which had previously been Labour's proposal.

"Has there ever been a more obvious example of a government totally bereft of ideas?," Starmer said.

"The question they must answer today is why did they not do it earlier?"

Ahead of the Budget, Labour’s Shadow Chancellor Rachel Reeves said it would be the "final chapter of fourteen years of economic failure" under the Conservatives.

“The Conservatives promised to fix the nation’s roof, but instead they have smashed the windows, kicked the door in and are now burning the house down," she said.

“The country needs change, not another failed Budget or the risk of five more years of Conservative chaos."

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