Chancellor delivers ‘Budget for Long-Term Growth’ in Northern Ireland

6 Mar 2024 07:17 PM

Spring Budget 2024

• Economy turning a corner, with inflation expected to fall to target next quarter, wages consistently rising faster than prices and better growth than European neighbours. 
• Chancellor capitalises on progress, sticking to the plan by putting £620 a year back into the pocket of workers in Northern Ireland thanks to changes at Autumn Statement and a second National Insurance tax cut in April for over 800,000 working people in Northern Ireland.
• High Income Child Benefit Charge to be assessed on a household-basis by April 2026, with immediate support for working families by increasing the threshold to £60,000 and halving the rate at which Child Benefit is repaid – representing a £1,260 boost on average for around half a million working families across the UK.
• The average car driver will save £50 this year as the 5p cut and freeze to fuel duty is maintained until March 2025, while pubs, breweries and distilleries in Northern Ireland will benefit from a further freeze to alcohol duty until February 2025 – also saving consumers money on their favourite tipple.
• New tax reliefs and investments will help establish the UK as a world leader in high-growth industries such as the creative sector, advanced manufacturing and life sciences.
• Northern Ireland Executive to receive around £100 million additional funding through the Barnett formula, on top of the significant £3.3 billion spending settlement within the comprehensive financial package confirmed last month.
• ‘Budget for Long Term Growth’ sticks to the plan by delivering lower taxes and more investment, while increasing size of economy by 0.2% in 2028-29 and meeting fiscal rules – taking the long-term decisions needed to build a brighter future.

More tax cuts for working people and more investment in high-potential industries headlined Chancellor Jeremy Hunt’s ‘Budget for Long-Term Growth’ today, Wednesday 6 March. 

With the independent Office for Budget Responsibility (OBR) confirming inflation is set to fall to target a year earlier than previously expected, wages rising consistently and the economy outperforming European neighbours, the Chancellor said he would stick to the plan to improve living standards by rewarding work and growing the economy.

Northern Ireland Secretary, Chris Heaton-Harris, said:

“Today’s Budget underlines the UK Government’s commitment to Northern Ireland and to the Union.

“I welcome the additional Barnett funding of £100 million for 2024-25, which is on top of the significant £3.3 billion spending settlement. This will provide a further boost to the Executive’s spending power to invest in its own priorities.

“I am delighted with the Chancellor’s announcement of over £1 billion of new tax reliefs for creative industries across the UK, which is great news for Northern Ireland where creative Industries have already contributed over £1 billion GVA to the NI economy and this will further support Northern Ireland’s opportunities for growth particularly in the creative and digital industries.

“The UK Government is also committing £2m to boost global investment and trade, which builds on the successful Northern Ireland Investment Summit held in September 2023. This new funding will enhance Northern Ireland’s opportunities to showcase its innovation and technological strengths, taking advantage of the Windsor Framework.”

Building on the 2 percentage point cut to Employee National Insurance at Autumn Statement, Mr Hunt announced a second 2p cut from 10% to 8% from April. The Chancellor also went further with tax cuts for the self-employed, having reduced Class 4 NICs from 9% to 8% and abolished the requirement to pay Class 2 NICs at Autumn Statement. Today he announced a further 2p cut to Class 4 NICs for the self-employed to 6%.

Combined with changes at Autumn Statement, today’s announcements represent a UK-wide tax cut of over £20 billion per year that amounts to a £620 average annual tax cut for over 800,000 workers in Northern Ireland. They also chart a path towards continued cuts to National Insurance when doing so can be achieved without increasing borrowing or compromising high-quality public services. The OBR says these reductions will lead to the equivalent of around 200,000 extra full-time workers by 2028/29, as people increase their working hours and move into work. This boost is why the Chancellor has prioritised NICs cuts in his ‘Budget for Long Term Growth’ and why he will continue to do so when fiscally responsible. He set out that his long-term ambition is to end the unfairness of double taxation of work.

Mr Hunt also announced that the High Income Child Benefit Charge will be assessed on a household basis by April 2026, with a consultation to come on achieving this. 

To ensure working families benefit from increasing their earnings before this change is made, the threshold to start paying back Child Benefit will increase in April from £50,000 to £60,000 – a 20% increase which will take 170,000 families UK-wide out of paying the charge this year – while Child Benefit will no longer need to be repaid in full until earnings exceed £80,000. This represents a £1,260 boost on average for around half a million working families, rising to nearly £5,000 for some families when combined with tax cuts since Autumn Statement. This will put an end to the current unfairness, where two parents earning £49,000 a year receive the full Child Benefit while a household with a single earner on over £50,000 does not. The OBR says the immediate changes to the HICBC will lead to an increase in hours worked equivalent to around 10,000 more people entering the workforce on a full-time basis. 

New tax breaks and investments will help to establish the UK as a world-leader in high-growth industries. The UK’s creative industries will be backed by over £1 billion, including higher tax reliefs to lower the cost of producing visual effects in high-end TV and film, a 40% relief on gross business rates until 2034 will be introduced for eligible film studios, and a new tax credit for independent British films with a budget of less than £15 million. Orchestras, museums, galleries and theatres will also benefit from a permanent 45% tax relief for touring productions and 40% relief for non-touring productions.

A £360 million package will support innovative R&D and manufacturing projects across the life sciences, automotive and aerospace sectors, with a further £45 million of funding to accelerate medical research into common diseases like cancer, dementia and epilepsy – while the Green Industries Growth Accelerator will be allocated an extra £120 million to build supply chains for offshore wind and carbon capture and storage. Opportunity will be spread across Northern Ireland with £20 million of funding each for Derry-Londonderry and Coleraine through the Long-Term Plans for Towns, and £2 million of funding for to boost global investment and trade opportunities.

The Chancellor also took steps to make the tax system simpler and fairer. The ‘non-dom’ tax regime will be abolished and replaced with a fairer system from April 2025 where new arrivals to the UK pay the same tax as everyone else after four years – raising £2.7 billion a year by 2028/29. As the oil and gas sector’s windfall profits from higher prices are expected to last longer, the sunset clause on the Energy Profits Levy will be extended by a year to March 2029, raising £1.5 billion while encouraging investment in the UK’s energy security by promising to legislate for its abolition should market prices fall to their historic norm sooner than expected.

As a result of decisions at Spring Budget, the Northern Ireland Executive is receiving around £100 million in additional funding in 2024-25 through the Barnett formula. This comes on top of its record £15 billion per year settlement at Spending Review 2021 and the significant, fair and generous £3.3 billion spending settlement confirmed last month. This allows the Northern Ireland Executive to stabilise public services, better manage public finances, increase opportunities for improved infrastructure and investment, pave the way for transformation of public services and enable the delivery of a pay award (2023-24) to public sector workers.

Accompanying forecasts by the OBR confirm that the combined impact of decisions taken at Spring Budget and the preceding two fiscal events will increase the size of the economy by 0.7% and increase total hours worked by the equivalent of 300,000 full-time workers by 2028/29 - with the combined impact of government policy since Autumn Statement 2022 reducing the tax burden in the final year of the forecast by 0.6%. Today’s announcements will reduce inflation in 2024/25, bring the equivalent of over 100,000 people into the workforce by 2028/29 and permanently grow the economy by 0.2% - with borrowing falling in every year of the forecast.

Lower taxes 

With the economy turning a corner and debt on track to fall as a share of GDP, the Chancellor delivered further tax cuts for working people – rewarding work, boosting growth and helping families with the cost of living. 

• Following a 2 percentage point cut in the Autumn Statement, the main rate of Employee National Insurance will be cut again by a further 2 percentage points from 10% to 8% in April – a one third reduction in the main rate of National Insurance which means the average Welsh worker on £31,800 will receive a tax cut of £770 compared to last year. 
• Following a 1 percentage point cut in the Autumn Statement, the main rate of Class 4 NICs for the self-employed will be cut by a further 2 percentage points from 8% to 6% from April.
• The average gain for over 800,000 workers in Northern Ireland from personal tax cuts delivered by the UK Government since Autumn is £620.
• High Income Child Benefit Charge (HICBC) will be administered on a household rather than an individual basis by April 2026, with a consultation in due course, while around half a million working families will benefit from an increase in the threshold from £50,000 to £60,000 and raising the level at which Child Benefit is fully repaid to £80,000 – worth £1260 per family on average.   
• OBR says combined changes to NICs will lead to the equivalent of around 100,000 new full-time workers joining the labour market by 2028-29 as people increase working hours and move into work, while confirmed changes to the HICBC will bring in the equivalent of an additional 10,000 full-time workers. 
• The main rates of fuel duty will be frozen again until March 2025 with the temporary 5p cut also extended, saving car drivers in Northern Ireland around £50 this year and £250 since the 5p cut was introduced – a £5 billion tax cut.
• The six-month alcohol duty freeze announced at Autumn Statement will be extended until 1 February 2025, saving consumers 2p on a pint of beer, 1p on a pint of cider, 10p on a bottle of wine and 33p on a bottle of spirit compared to if the planned rise had gone ahead. This will benefit 38,000 pubs across the UK while reducing inflation this year.
• The higher rate of Capital Gains Tax (CGT) on property will be cut from 28% to 24% from April 2024, firing up the residential property market and supporting thousands of jobs that rely on it. 

Investment and levelling-up

Building on recent investments in the UK by Google, Nissan and Microsoft, Mr Hunt announced exciting new investments in key growth sectors and set out plans to support businesses of all sizes to grow.

• Significant package of support to establish the UK as a world leader in fast-growing industries over the next five years, including over £1 billion in new tax reliefs for creative industries, £270 million in automotive and aerospace R&D projects focusing, and a £120 million top up for the Green Industries Growth Accelerator to help build supply chains for offshore wind and carbon capture and storage.
• Draft legislation will be published within weeks to extend full expensing – an £11 billion tax cut for business every year to help them invest for less – to leased assets when affordable to do so, strengthening one of the most attractive capital allowance regimes of any major country. 
• Small and medium sized businesses in Northern Ireland will be supported to invest and grow through a £200 million extension of the Growth Guarantee Scheme, helping 11,000 small businesses across the UK access the finance they need, and an increase in the VAT registration threshold from £85,000 to £90,000 which will take around 28,000 small businesses UK-wide out of paying VAT altogether.
• £45 million will fund medical research to develop new medicines for diseases like cancer, dementia and epilepsy.
• Pensions and savings reforms, including the introduction of a new UK ISA allowing an additional £5,000 annual investment in UK equities tax-free and new British Savings Bonds offering savers a guaranteed rate for 3 years, will deliver better returns for savers.
• £2.2 million for the redevelopment of the South Stand at Crusaders FC located on the Shore Road Belfast into a unique state of the art community education, event and skills centre encompassing sport, educational attainment, skills development, community engagement, and health and wellbeing provision.

Sustainable public finances 

The ‘Budget for Long Term Growth’ delivers lower taxes and more investment in a responsible and affordable way, with steps taken to raise new revenues and the OBR confirming the Chancellor’s fiscal rules will be met. 

• Underlying debt will fall as a share of the economy to 92.9% in 2028/29 - meeting the debt rule with £8.9 billion headroom. Headline debt will fall as a percentage of GDP every year from 2024/25.
• Public sector borrowing falls in every year of the forecast. The deficit will be 2.7% of GDP in 2025-26 – meeting the second fiscal rule to get borrowing below 3% of GDP three years early - and by 2028-29 it falls to 1.2% of GDP, which is the lowest level since 2001-02.  
• Measures to tackle the tax gap will bring in an additional £4.5 billion a year by 2028/29, saving nearly £10 billion for the public purse when combined with policies announced at Autumn Statement.
• The ‘non-dom’ regime will be replaced by a simpler system where arrivals have access to a more generous scheme for their first four years of residency before paying the same as everyone else, raising £2.7 billion a year by 2028/29 without deterring investment.
• The Energy Profits Levy sunset clause will be extended from March 2028 to March 2029 to raise £1.5 billion a year, but legislation in the Finance Bill will abolish the Levy if market prices fall to their historic norm sooner than expected – maintaining investment in our energy security.
• A duty on vapes will be introduced from October 2026 to discourage non-smokers and young people from taking up vaping, alongside a one-off increase in tobacco duty to recognise the role vapes play in helping people to quit smoking. This will raise a combined £1.3 billion by 2028/29.
• Multiple Dwellings Relief will be abolished from June after showing no evidence of promoting investment in the private rented sector - raising £385 million a year. The Furnished Holiday Lettings tax regime will be abolished from April 2025, raising £245 million a year while making it easier for people in Northern Ireland to find a home in their community. 

Further information 

• The Chancellor’s speech can be found later this afternoon here.
• Other documents published alongside the Autumn Statement today can be found here.