Breaking down the Budget: Four key takeaways from Chancellor Hunt's fiscal plans

Drew Nutsford, Chartered Financial Planner, Waverton Wealth

The much-anticipated Budget has been delivered by Chancellor Jeremy Hunt, with economists suggesting it was a pre-election Budget, designed to attract voters as the Conservative Party lags behind in the polls, says Chartered Financial Planner Drew Nutsford.

The working population of Higher and Additional tax-payers across Scotland will be pleased to see a further 2p cut to National Insurance Contributions rather than a reduction to income tax that was rumoured to be on the cards in the lead-up to the budget.

Here are four key takeaways covering personal finances….

Reduction to high rate property Capital Gains Tax

Chancellor Jeremy Hunt has reduced the higher rate of capital gains tax (CGT) on property from 28% to 24% to encourage landlords and second home-owners to sell their properties, making more available for a variety of buyers including those looking to get on the housing ladder for the first time.

The changes will take place with immediate effect. Currently, if an individual has an annual income above the £50,270 threshold, they have to pay 28% in tax for residential property. The lower rate of CGT on property will remain at 18%.

New UK ISA

A new UK ISA will allow an additional £5,000 ISA allowance for investment in ‘promising UK businesses’ in addition to the current ISA allowance of £20,000 per year.

A consultation setting out the proposals asks investors which assets should be included in the extra allowance. Options on the table include UK shares and funds, as well as corporate bonds and even gilts. Cash instruments will be excluded though.

High Income Child Benefit Charge (HICBC)

The government is also increasing the income threshold at which HICBC starts to be charged from £50,000 to £60,000 from April 2024.

In addition, the rate at which the HICBC is charged will also be halved from 1% of the Child Benefit payment for every additional £100 earnt above the threshold, to 1% for every £200. This means Child Benefit will not be withdrawn in full until individuals earn £80,000 or higher.

It is now recognised that issues raised around the unfairness in how the HICBC is currently charged on an individual basis. For instance, dual-income families of £49,500 each (with a household income of £99,000) may not be liable to the HICBC, but a single parent earning over £50,000 could. From April 2026, the government plans to administer the HICBC on a household rather than individual basis.

National Insurance (NIC) cuts

Combined with the 2p cut announced at Autumn Statement 2023, this is a tax cut worth over £900 for the average employee on £35,400 in 2024-25 – a one-third reduction in the main rate of National Insurance. The self-employed will see further reductions of Class 4 NIC with a total reduction from 9% to 6%.

Drew Nutsford, Chartered Financial Planner with Waverton Wealth and a Fellow of the Personal Financial Society. He holds a Certificate in ESG Investing through the CFA Society UK