Chancellor Jeremy Hunt is set to announce the Government's tax and spending plans in his 2024 Spring Budget today at 12:30pm, which is expected to be the last fiscal event before a general election later this year.
Key proposals include a 2% reduction in National Insurance contributions (NICs) for employees, building on the previous 2% cut in last year's Autumn Statement and further lowering the rate from 10% to 8%.
Despite this, personal tax allowances and thresholds are set to remain unchanged, potentially pushing more people into higher tax brackets.
Hunt is also anticipated to maintain the 15-year freeze on fuel duty and extend a temporary 5p cut at an estimated cost of £5 billion.
To balance these cuts, the Budget will likely include tax increases in other areas and cut public service spending. This may include reducing tax reliefs for non-dom residents, implementing a new vaping levy, and increasing taxes on second homes and short-term holiday lets.
Additionally, there are rumours that the Chancellor will extend the windfall tax on North Sea oil and gas company profits.
Public spending is expected to increase marginally above inflation but with stringent efficiency measures proposed, including a reduction in public sector spending growth from 1% to 0.75% above inflation. These measures could help generate savings and address funding shortfalls, particularly in the NHS.
The Office for Budget Responsibility (OBR) will release an updated economic forecast alongside the Budget, likely predicting lower inflation and interest rates but downgrading GDP growth expectations.
Despite these challenges, the Chancellor aims to meet a self-imposed rule to reduce the debt-to-GDP ratio by the end of a five-year forecast period.
We'll keep you updated about the new measures.