What To Expect From Jeremy Hunt's Spring Budget
Jeremy Hunt will deliver the Spring budget on 6 March.
5 min read
Chancellor Jeremy Hunt is under pressure from backbench Tory MPs to deliver tax cuts in the Spring Budget, as the government looks for ways to try to convince voters not to abandon the Conservatives in the general election.
Hunt will announce the Budget in the House of Commons on Wednesday, setting out the Treasury’s taxation and spending plans for the next financial year, alongside an updated economic forecast.
While the Treasury has been seeking to play down expectations of major reforms until the economy performs better, many Tory MPs believe it is the government’s last chance to shift the dial before the next general election, expected by the end of this year. A poll published by Ipsos UK on Monday suggested only 20 per cent of the public plan to vote Tory, the lowest Ipsos score ever recorded by the party.
Here is everything we know so far about what could be included in the Budget:
Tax cuts
In the Autumn Statement last year, Hunt went some way to placate pro-tax cut Tories by reducing the main National Insurance rate from 12 per cent to 10 per cent. However, the UK's tax take still grew to its highest level on record by the end of 2023, meaning Hunt is expected to make further tax cuts in this Budget in an attempt to satisfy calls from increasingly impatient Conservative MPs.
He is reportedly considering doing this through a 1 per cent cut to either National Insurance or income tax, recently telling the BBC’s Political Thinking podcast that his long-term goal was to “lighten the tax burden”.
This move would not be universally welcomed. The International Monetary Fund has warned against tax cuts, arguing that "fiscal consolidation" is needed with spending on key areas such as health, education and tackling climate change to encourage growth and investment.
The One Nation Conservatives group of centrist MPs has called on the Chancellor to abolish stamp duty for buyers who are downsizing in order to “free up housing stock”, particularly for younger people who are struggling to get on the housing ladder. Another group of Tory MPs, led by former prime minister Liz Truss, has called for the same, meaning the Chancellor faces pressure to scrap stamp duty from many factions within the party.
Other measures to address the UK's housing crisis could include plans for a 99 per cent mortgage scheme, according to The Financial Times, where home buyers would only have to put down a 1 per cent deposit on their first home.
There is also speculation as to whether Hunt will cut inheritance tax, with The Telegraph reporting he is weighing that option up against cutting income tax. With the majority of Tory MPs reportedly favouring the latter option, inheritance tax cuts seem less likely.
With tax cuts of some form almost certainly on the cards, The Financial Times has reported that Hunt may change the UK's "non-dom" tax rules in order to make room for them. Axing the non-dom tax regime would raise an estimated £3.6bn a year and take the wind out of the sails of Labour’s economic plans if they get into government by using one of their long-trailed proposals.
Spending cuts
At the Autumn Statement, as expected, the Chancellor did not make any new funding available for public services. It is unlikely that the Spring Budget will be any different, with tax cuts likely to be prioritised over increasing spending.
In an interview with The Telegraph, Hunt said he would use the Budget to reduce Whitehall and public sector “waste” and announce plans to slash tens of thousands of civil service jobs.
He said there was “too much waste across many parts of the public sector” and that “the money we spend on public services could be spent much more efficiently”, including in his view by cutting down on the time and resources spent on equality, diversity and inclusion hires and initiatives, initiatives which he said he found “very hard to defend”.
Vaping
Another way that Hunt is reportedly considering to help fund tax cuts is by introducing new taxes on vaping which would be imposed on imports and manufacturers of vapes.
According to The Sun, the duty would apply to the liquid in vapes and a one-off tax on tobacco duty that will raise £500 million for Treasury might also be announced.
Childcare
The Autumn Statement saw Hunt announce an expansion of funded childcare for children aged nine months and above, where previously it had been restricted to three and four-year-olds.
However, with the phased rollout due to begin in April, childcare providers and business groups are urging the Chancellor to use this week’s Budget to clarify how it will be implemented in practice and how providers will be funded to provide the extra hours of childcare.
Hospitality and holidays
A letter signed by 45 Conservative MPs has called for Chancellor Jeremy Hunt to reform VAT and Business Rates for hospitality businesses in the Spring Budget.
The letter said the hospitality industry had been hit by “sustained pressures” in recent years which included high energy bills, rising wage costs and a challenging recruitment environment. Signatories, including former cabinet ministers Priti Patel and Thérèse Coffey, have therefore urged the government to consider reducing taxes for pubs and restaurants.
There have been calls from a number of other industries, including EV charging companies, retail, and creative sectors, for cuts to VAT to be included in the Budget.
Hunt is also reportedly considering scrapping tax perks for holiday let owners in order to give a boost to rental markets in popular holiday locations across the UK where many properties are turned into holiday lets rather than permanent homes.
Another measure which would increase air fare duty on business class flights has also reportedly been considered in order to pay for tax cuts.
Oil and gas windfall tax
The government previously introduced a windfall tax for oil and gas companies in 2022 after Russia's war in Ukraine pushed up prices and increased their profits. Some reports suggest that the Chancellor could extend this windfall tax for a further year beyond the current end date of March 2028.
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