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Tuesday, March 5, 2024

2024 Spring Budget: How Your Finances Could Change

The 2024 Spring Budget is scheduled for March 6th, with Chancellor Jeremy Hunt aiming to reveal tax changes ahead of the looming general election. Rumors suggest there may be significant cuts to boost voter support.

What Tax Reforms Could We See?

Inheritance tax reductions are strongly rumored after proposals were left out of the 2023 Autumn Budget. Only 4% of estates currently incur inheritance tax. However, with rising house prices but frozen thresholds, more families may get caught in future.

Suggested reforms include:

  • Reducing the inheritance tax rate – Making it cheaper to pass on wealth
  • Increasing tax-free allowances – Letting more money be gifted or inherited tax-free
  • Abolishing inheritance tax entirely – Scrapping the tax favored by traditional Tory voters

“Reforms would ease unrest but favor better-off families amidst the cost of living crisis,” warns Hargreaves Lansdown’s Susannah Streeter.

Could Income Tax Also Be Cut?

Prime Minister Rishi Sunak campaigned on lowering the basic income tax rate in 2022. March’s budget may realize this pledge to sway voters.

Raising personal tax allowances would deliver fairer relief from income tax rises caused by frozen thresholds.

“Allowances have failed to keep pace with 6% inflation,” highlights Evelyn Partners’ Sian Steele. “This drags more people into higher tax bands.”

Mercian Accountants suggest shaving 1-2% off the current basic income tax rate of 20%, reducing it to 18-19%. But focus may fall on low-middle earners rather than across-the-board cuts.

Will Dividend & Capital Gains Tax Allowances Be Restored?

Allowances will halve from April 2024, hitting investors and business owners. Could a pre-election reprieve happen?

“Stopping further dividend & capital gains cuts would ease pressure and support investment,” Susannah Streeter reasons. This could boost Tory growth plans.

Conclusion

With an election looming, expect bold tax pledges in the 2024 Spring Budget. Inheritance, income, dividend and capital gains tax reforms seem likely as the Conservatives fight to secure voter support.

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