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Speech bubbles AccountingWEB Accountants have their say on the Spring Budget
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Accountants have their say on the Spring Budget

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As the Chancellor kicked off his Spring Budget, the AccountingWEB community was quick to share their thoughts and opinions on Hunt’s announcements.

8th Mar 2024
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Jeremy Hunt’s Spring Budget saw another bid for promoting growth, arguing: “Lower tax means higher growth. And higher growth means more opportunity, more prosperity and more funding for our precious public services.”

In a poll conducted on LinkedIn and X, accountants were asked which new tax measure would have the most impact on their clients. The results were as follows: 

  • a reform to the high-income child benefit charge (HICBC) – 19% 
  • abolishing the furnished holiday lettings regime (FHL) – 20%
  • a 2% cut to the main rate of employee national insurance (NI) – 26%
  • an increase to the VAT threshold – 35%. 

Accountants also took to Any Answers during the Spring Budget and had a lot to say about the Chancellor’s announcements. 

Order! Order!

The AccountingWEB community commented on the chaotic atmosphere in the House of Commons, which saw constant interruptions from the opposition alongside some jabs made by Hunt. 

Regular commenter, Mr_awol said, “There’s always a bit (ok a lot) of barracking but it seems worse than usual.” They questioned whether this was due to worsening behaviour from the opposition, a lack of control or the questionable comments made by Hunt. 

This was echoed by another member, DKB-Sheffield who wrote, “It sounds like the crowd at a Taylor Swift concert, with all Swifties wearing suits!”

Hunt’s distasteful digs at the opposition did not go down well with the community with one AWEB member saying, “Is this a real Budget or mere attacks on the other side with lots of time to indulge oneself? Stop saying what the other side did/said and tell us what you have done/will do. (Last chance saloon here.)”

VAT increase falls flat

The Chancellor announced that the VAT threshold would increase by £5,000 which did not please many accountants. This was voted as the most impactful and many were disappointed, arguing that it won’t be effective. 

AWEB commenter, DJKL said that this change will not remove the VAT cliff edge and instead is just moving it to a slightly higher threshold. 

The Chancellor said, “This will bring tens of thousands of businesses out of paying VAT altogether and encourage many more to invest and grow.” Mr_awol disagreed with Hunt’s statement and further echoed DJKL. “If a business is that marginal, on a rolling 12-month basis, this isn’t noticeably aiding growth. Surely the answer would have been either increase it dramatically or reduce it significantly to remove the current cliff edge,” they said. 

And Jason Croke who reported on the VAT increase on Budget day also offered some more insights. 

He said: “£5k VAT threshold increase? Pfft. Minimum wage increase next month and general inflation will wipe that out in no time, making the entire rise pointless.

“Either go for a very low threshold, capture everyone (and HMRC will meltdown totally) or raise the threshold to at least £100k and the small traders will stay small and the rest will punch through and grow, plus the bonus of less work for HMRC having to deal with all those smaller traders,” Croke concluded. 

Increasing uncertainties 

It wasn’t just the VAT threshold that left the community questioning Hunt’s Spring Budget. Both the cut to national insurance contributions (NICs) as well as abolishing the FHL regime created some uncertainty on Any Answers.

Hometing and Mr_awol both came with questions. Hometing said, “Do they really think a 2% NIC cut is going to persuade people back into work?” which was followed by Mr_awol’s question, “What happens when all the employee NIC has gone, and it’s just employers paying it? Does it get a name change to an ‘employment tax’?”

Mr_awol then began questioning Hunt abolishing the FHL regime and commented, “I don’t think anyone is going to be saying, ‘Oh look the rate has gone down 4% I will sell my FHL portfolio.’ But I do think lots of people will be thinking, ‘Best flog the FHL as it no longer pays its way.’ I suppose Hunt expects the rate cut to drive demand, if demand is created by the difference in FHL treatment he can pretend it is a result of the rate cut ‘as predicted in the budget’.”

A HICBC surprise 

The plan to reform the HICBC has been deemed as Hunt’s rabbit out of the hat and it was met with a mixed reception. 

Mr_awol felt that HICBC being administered on a household basis was much fairer but the £60,000 threshold was disappointing. They wrote, “Depending on the threshold of the new system, surely it may drag some people back in?” 

Regular contributor, lionofludesch also was glad that the threshold had been increased but was frustrated that “he ignored the major unfairness of the two-earner/one-earner households”.

They continued by summarising their opinion on the budget, writing: “Looks like a ‘scorched earth’ budget to me.”

Visit our dedicated Spring Budget 2024 hub here to find all related articles from our experts.

What did you think about the Spring Budget? Let us know in the comments below.

Replies (3)

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By Tom+Cross
08th Mar 2024 16:17

As on many of these occasions, I felt that the Budget was Shakespearean. 'Much Ado, about Nothing'.

These events are unique opportunities for the public to see our democratic process, at its very best. Or, that's how I remember Budgets in the past. These days, it's clearly apparent that the Government machine, has more holes than a culinder, and well before the Budget speech, most of the public have a general idea of what will be announced. In a democracy that 'arrangement' fails Parliament and disrespects the electorate.

The 'fuss' surrounding reductions in national insurance was irrelevant, compared to the benefits of an (inflation) linked increase, in the personal allowance, which has remained frozen, since 2020/21.

I suppose we should be realistic. It's an election year. Which Chancellor would show flair and nous, in an election year. Come to think of it, when did a Chancellor last display nous?

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By DJKL
12th Mar 2024 12:00

So not a "Comedy of Errors"?

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By FactChecker
08th Mar 2024 17:38

"Hunt’s distasteful digs at the opposition .." - really?

I don't like the guy, let alone most of his policies, but I listened to the whole (interminable) speech - including all the interruptions - and the opposition benches not only started 'rumbling' before he'd finished his first sentence, but also outdid him by a large margin in the 'robustness' of their very non-parliamentary language ... and in directing it at the individual rather than the party or policy!

Frankly the whole spectacle (as manufactured and enjoyed by members of all parties) was worthy of the 'disgraceful' epithet, but the suggestion it was all on one side is pure fantasy.

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