Studentnomics

I never liked the day when budgets were announced as my dad would always take control of TV to listen to every word spoken by every analyst.

Over time I meant to appreciate the importance of this event and its impact on my family and hence on me . I always learnt to look for things that directly impacted me and try to understand the impact of social events on budget and impact of budget on the society.

Today the Chancellor published Spring budget statement and instead of sulking away from TV I eagerly joined in my parents to absorb and understand the statement and also understand the broader concept of budgets.

What is Budgeting

Budgeting is the process of calculating how much money you must earn or save during a particular period of time, and of planning how you will spend it:

Having a budget keeps your spending in check and makes sure that your savings are on track for the future.

The three types of annual Government budgets based on estimates are Surplus Budget, Balanced Budget, and Deficit Budget.
Government Budgets

Each year the Chancellor of the Exchequer makes the Budget statement to the House of Commons outlining the state of the economy and the Government’s proposals for changes to taxation. The House of Commons debates the Budget and scrutinises the subsequent Finance Bill, which enacts the Chancellor’s proposals.

The Budget, or Financial Statement, is a statement made to the House of Commons by the Chancellor of the Exchequer on the nation’s finances and the Government’s proposals for changes to taxation. The Budget also includes forecasts for the economy by the Office for Budget Responsibility (OBR).

The Budget and the Finance Bill are usually annual events, in part because income tax and corporation tax are annual taxes which have to be renewed by legislation each year. By contrast, most UK taxes including all indirect taxes, petroleum revenue tax and taxes on capital are ‘permanent’.

However, the Chancellor can announce changes to taxes and spending about 3 times during the year 

The keys points of spring budget statement presented by chancellor Jeremy hunt in 6 March are as follows

Impact on Taxation

National Insurance has been cut by 2p for every pound for employees and the self-employed. Puts more money in pocket of students what are doing temporary jobs 

Non-dom tax regime, for UK residents whose permanent home is overseas, to be replaced with new rules from April 2025, this will add to taxes 

There is an additional £5,000 UK ISA tax allowance for savers investing in “UK-focused” shares – to be set up following a consultation. This should help flow more money into the system 

Changes to Benefits and income support

Full child benefits to be paid to households where highest-earning parent earns up to £60,000 – the current limit is £50,000 , This will help counter the impact of high cost of living for families with children

Partial child benefit to be paid where highest earner earns up to £80,000 

Changes to taxes on Cigarettes, vapes and alcohol

Freeze on alcohol duty, which had been due to end in August, to continue until February 2025

New tax on vaping products from October 2026, linked to the levels of nicotine

Tobacco duty to go up £2.00 per 100 cigarettes at same time, to ensure vaping remains cheaper

Impact on Transport and energy

Fuel duty frozen again, with the 5p cut in fuel duty on petrol and diesel, due to end later this month, kept for another year. This will be relief for parents what are often taxis for their children.

“Windfall” tax on the profits of energy firms, which had been scheduled to end in March 2028, extended until 2029. So the more you use energy the more tax government makes to help spend back on us.

Air passenger duty, the tax paid on flights, to go up for business class tickets. Help collect more from the rich !

A further £120m for a government fund that invests in green energy projects . This will generate more employment and encourage youth to learn and focus on environment friendly projects 

Housing related tax changes

Higher rate of tax paid on profits from selling property cut from 28% to 24%. This might encourage those who are holding multiple properties to release them back in the market 

Stamp duty tax break when purchasing multiple properties in England or Northern Ireland to end in June. This will discourage investors and leave more properties for those who need them.

Update on Public debt, inflation and the economy

Office for Budget Responsibility predicts UK economy to grow by 0.8% this year and 1.9% next year. This is great news for new graduates and increase their chances of securing a job

Growth of 2% predicted for 2026, with 1.8% in 2027 and 1.7% in 2028

UK’s inflation rate forecast to fall below 2% target by the end of June, falling to 1.5% next year. This should hopefully lead in reduction of interest rates and mortgage rates putting more money in hands of families 

NHS budget to go up £2.5bn next year; the service will also get £3.4bn up to 2030 to improve productivity . This should help ease the pressure on NHS and help improve the services to patients 

Measures to boost Business and investment

Threshold at which small businesses must register to pay VAT raised from £85,000 to £90,000 from April.  

Conclusion

With an election due within the next year the Chancellor presented his Spring Budget 2024 with an eye on the electorate. The majority of proposals were designed to support those hardest hits by the rise in the cost in living as well as freezing alcohol and fuel duties that impact a wide range of consumers