Spring Budget 2024: Some key takeaways

Commenting on the National Insurance contribution cut announced in the Spring Budget, Dr Mandal said:

Reducing National Insurance contributions (NICs) by 2p in the pound for both employees and the self-employed could lead to various outcomes. It will likely increase individuals' disposable income, potentially spurring consumer spending and bolstering the economy. Lower NICs might also incentivize employment by reducing labour costs for employers and encouraging job seekers. Self-employed individuals, often burdened with higher NICs, will find relief and encouragement for entrepreneurship. However, this reduction could strain government revenue unless offset by other tax hikes or spending cuts, necessitating careful fiscal planning. While it could act as a short-term economic stimulus, policymakers must weigh long-term effects on government finances, social security, and income distribution

Commenting on the impact the Spring Budget will have on travel and energy, Dr Mandal said:

The decision to maintain the freeze on fuel duty, along with the ongoing 5p reduction in fuel duty on petrol and diesel, provides continued relief to drivers, potentially easing financial pressure amidst escalating fuel costs. Extending the "windfall" tax on energy companies' profits until 2029 ensures a sustained revenue stream for the government and addresses concerns regarding excessive profits in the energy sector. The rise in air passenger duty for business class tickets is intended to boost revenue while promoting more eco-friendly travel options. The £160 million agreement for the UK government to acquire the site earmarked for the Wylfa nuclear project in north Wales secures investment in nuclear energy infrastructure. Furthermore, the additional £120 million allocated to a government fund for green energy projects underscores a commitment to renewable energy and environmental conservation.

On the tax allowances for ISAs announced in the Spring Budget, Dr Mandal said:

The proposal of a £5,000 tax allowance for UK Individual Savings Accounts (ISAs) tailored toward investments in "UK-focused" shares could yield multiple effects'

In summary, the proposed £5,000 tax allowance for UK ISA investments in "UK-focused" shares could stimulate domestic investment, support SMEs, diversify portfolios, and enhance investor confidence. However, its impact on tax revenues and effective consultation with stakeholders are critical for successful implementation.