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by Louise Wilson
06 March 2024
National Insurance cut announced by chancellor

Chancellor Jeremy Hunt delivered what will be his last budget before the election

National Insurance cut announced by chancellor

Chancellor Jeremy Hunt has confirmed a two per cent cut to National Insurance contributions in his Spring Budget.

The tax cut will kick in from April, with employees to pay eight per cent and the self-employed to pay six per cent.

Hunt said this was part of a long-term plan to continue to reduce NI contributions to “make work pay”.

In order to fund this cut, the chancellor announced the extension of the windfall tax on oil and gas profits for a year until 2029 – a move which had been opposed by Scottish Conservative leader Douglas Ross.

The energy profits levy was introduced in 2022 and is set to end in 2028. Hunt said the levy would be abolished if market prices fell but, at the present time, companies continue to make windfall profits due to the war in Ukraine.

Hunt said: “Because the increase in energy prices caused by the Ukraine war is expected to last longer, so too will the sector’s windfall profits. I will extend the sunset on the energy profits levy for an additional year to 2029, raising £1.5bn.”

Labour last month backed an extension to the levy, as well as increasing it from 75 to 78 per cent.

Ross previously dubbed this plan “disastrous” and has now confirmed he will vote against the UK Government’s legislation to bring about the change.

He said: “While I accept the chancellor had some tough decisions to make, I’m deeply disappointed by his decision to extend the windfall tax for a further year… the budget announcement is a step in the wrong direction.

“As such, I will not vote for the separate legislation needed to pass the windfall tax extension and will continue to urge the chancellor to reconsider.”

Hunt also announced changes to non-domiciled status, which currently allows people not to pay tax on money they make overseas.

The changes will mean people resident in the UK will not be required to pay tax for four years, but thereafter will have to pay the same tax as other UK residents. Transitional arrangements will be put in place for those currently benefiting from non-dom status.

This is projected to raise £2.7bn per year, which the chancellor said will be used “to help cut taxes on working families”.

Other announcements in the budget included:

  • £1m fund to create a memorial for Muslims who died in war
  • freezing alcohol and fuel duties
  • levelling up cash, including for Dundee and Arbroath, which will deliver £300m for the Scottish Government through Barnett consequentials
  • a new excise duty on vaping products, with tobacco duty to increase
  • changes to the high-income child benefit charge a move to a household basis
  • funding for a new Public Sector Productivity Plan

Figures from the Office for Budget Responsibility were published at the same time as the budget. It predicts the UK will exit recession shortly and inflation will drop to below two per cent this year.

Hunt said: “Because we have turned the corner on inflation, soon we will turn the corner on growth.”

Labour leader Keir Starmer described the budget as a “last desperate act of a party that has failed”.

He accused the UK Government of trying to “give with one hand and take even more with the other”, and proved the Conservatives were “out of touch, out of ideas and nearly out of road”.

The SNP’s Treasury spokesperson Drew Hendry said the budget will be “cold comfort” to people struggling with the higher cost of living.

He said the statement was a “last ditch, tone-deaf approach to desperately try to recover in the polls”.

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