London
Hunt’s juggling act: Jeremy Hunt (pictured), the chancellor, “didn’t have a lot of space to offer treats for voters”, says Susannah Streeter of Hargreaves Lansdown. Hunt had warned prior to delivering his Spring Budget speech on Wednesday that gloomy forecasts from the Office for Budget Responsibility (OBR) had reduced his “fiscal headroom” for tax giveaways. However, the OBR did raise its expectations for the economy to expand 0.8% this year, 1.9% the next and 2% in 2026, while annual consumer price inflation is forecast to fall to the Bank of England’s 2% target in just two months’ time, from 4% at present. In any case, this being an election year Hunt had to come up with something – all without spooking the bond market. Ten-year gilt yields dropped back on what was a “pretty muted response to a budgetary hat… [that] was notably short of surprise rabbits”.
A “British individual savings account” (Isa) is to be introduced, allowing for an additional £5,000 to be invested in UK-listed equities, on top of the existing £20,000 Isa allowance. “Increasing investment into UK companies is a laudable aim, but this ill-conceived, politically motivated decision will simply not achieve that objective,” says Michael Summersgill, CEO at AJ Bell. “The answer lies elsewhere” in, for example, “extending the existing Aim exemption from stamp duty… to a wider pool of UK assets.”
Hunt’s other main Budget spectacular was to cut national insurance (NI) by two percentage points to 8% for employees, and 6% for the self-employed – the cheaper option as opposed to cutting income tax, which retirees also pay. It wasn’t what Conservative MPs with an eye to defending their seats had been hoping for. Still, those earning a typical £35,000 a year will save almost £900 on their annual NI bill. “The chancellor will be crowing about tax cuts for those who need it most, but… [they] can’t be taken in isolation,” says AJ Bell’s Laura Suter. Because “income-tax bands have been frozen at the same time as we’ve seen supercharged inflation pushing up both prices and wages… for many, their total tax bills will still be far higher than if the government had never introduced the income tax band freeze”.
Other highlights from the Budget include the raising of the high-income child benefit threshold by £10,000 to £60,000; and the small business VAT threshold by £5,000 to £90,000 from 1 April; the introduction of a tax on vaping from October 2026; extensions on the freezing of alcohol duty, and the windf
