Budget 2024: Chancellor abolishes ‘non-dom’ tax breaks – and confirms national insurance will be cut by 2p
The chancellor has said that the current tax system for non-doms will be abolished – and confirmed a 2p cut to national insurance.
In the budget, Jeremy Hunt said “permanent cuts in taxation” were possible because of the progress made in bringing down inflation – with forecasts suggesting it will fall to the target level of 2% within months.
Scrapping the “non-doms” regime, which allowed certain wealthy individuals to avoid paying tax on their foreign income, is expected to raise £2.7bn a year.
Budget live: No rabbit out of the hat on income tax from chancellor
Mr Hunt spoke about cutting taxes to increase growth, and the official Office for Budget Responsibility (OBR) forecast predicted that living standards will grow faster than expected.
But real disposable household disposable income is not expected to recover to pre-pandemic levels until the 2025-26 period, after the next election.
And the tax burden is also set to continue to rise – albeit at a slightly reduced level when compared to last autumn’s forecast.
In total, the government will take £19.7bn more in tax by 2029 than forecasted in March 2021, even when the cuts to national insurance are included, due to fiscal drag.
Read more:
What key budget terms mean – fiscal drag, headroom and tax thresholds
The key announcements of the 2024 Budget
In terms of spending, Mr Hunt earmarked almost £6bn for the NHS – with artificial intelligence set to be used to “cut form-filling for doctors” in a digitisation drive.
A 5p cut to fuel duty will be extended for another 12 months – with the government “backing the Great British pub” by holding the price of beer, wine and spirits steady until February 2025.
Meanwhile, Britons will be able to invest up to £5,000 in UK companies tax-free – in addition to their current ISA allowance – through a new “British ISA”.
Please use Chrome browser for a more accessible video player
Chancellor cuts national insurance in budget
He also announced:
• The High Income Child Benefit Charge threshold will increase from £50,000 to £60,000
• A new excise duty on vaping, as well as a one-off increase to tobacco duty
• The higher capital gains tax rate on property will fall from 28% to 24%
• The VAT registration threshold will rise from £85,000 to £90,000 from 1 April – the first increase in seven years
• A fund aimed at supporting vulnerable households with the cost of living will be extended by a further six months
• The UK economy is expected to grow by 0.8% this year – and 1.9% in 2025
• Hundreds of millions of pounds to tackle “historic underinvestment in our nations and regions”
The 2p cut to national insurance was widely trailed – and follows a previous 2p cut announced in the autumn statement. Combined, this could save the average worker up to £900 a year.
But the chancellor had faced calls from Tory MPs to cut income tax or unfreeze tax thresholds to prevent Britons from being dragged into higher bands when they get pay rises.
Please use Chrome browser for a more accessible video player
Awkward wait for chancellor outside No 11
Mr Hunt is already facing anger from Scottish Conservatives, after he announced an extension of the windfall tax on profits made by energy companies in the North Sea.
The leader of the Scottish Tories, Douglas Ross, said he would not vote with the legislation – implying he would either oppose or abstain on the motion to introduce the measure.
Andrew Bowie, a Tory minister, said the will be “working with” Mr Ross to “resolve” the matter.
Labour leader Sir Keir Starmer said the budget was “bereft of ideas”.
This budget is set to be the last before the election – with Mr Hunt under pressure to revive economic growth and the government’s prospects at the ballot box.
The UK economy slipped into a technical recession at the end of last year, and the Tories are about 20 points behind in the opinion polls.
Money blog: What budget means for you
Please use Chrome browser for a more accessible video player
Why don’t we know when the UK election is?
Before the budget was announced, shadow chancellor Rachel Reeves said: “The Conservatives promised to fix the nation’s roof, but instead they have smashed the windows, kicked the door in and are now burning the house down.
“Taxes are rising, prices are still going up in the shops and we have been hit by recession. Nothing the chancellor says or does can undo the economic vandalism of the Conservatives over the past decade.”
Politics
Boris Johnson pays tribute to polling station staff who refused to let him vote without photo ID
Boris Johnson has paid tribute to the villagers who Sky News revealed turned him away from a polling station when he tried to vote without a valid photo ID – under rules he introduced.
The former prime minister said he attempted to cast his ballot using a magazine sleeve with his name and address on as proof but was prevented from doing so.
The requirement to provide photo ID was introduced by Mr Johnson during his time in Downing Street as part of the Elections Act 2022.
The move was controversial over fears it would bar people from voting, particularly among disadvantaged groups.
Local election live: Khan likely to cling on to London – as West Midlands on knife-edge
Mr Johnson had been seeking to vote in South Oxfordshire, where a police and crime commissioner for Thames Valley was being elected.
Writing in his Daily Mail column, he said: “I want to pay a particular tribute to the three villagers who on Thursday rightly turned me away when I appeared in the polling station with nothing to prove my identity except the sleeve of my copy of Prospect magazine, on which my name and address had been printed.
“I showed it to them and they looked very dubious… within minutes I was back with my driving licence and voted Tory.”
Read more:
The winners and losers
Charts tell story of Conservative collapse
Analysis: Labour’s future success is less clear-cut
Thursday’s election is the first time many voters in England and Wales have had to present ID to vote under provisions first rolled out at last year’s local elections.
As well as driving licences, other acceptable forms of ID include passports, proof of age cards, blue badges, and some concessionary travel cards.
Keep up with all the latest news from the UK and around the world by following Sky News
The government has also said it intends to make veterans’ ID cards a valid form of voter identification after former service personnel were turned away.
Veterans’ minister Johnny Mercer apologised to those who had been unable to use the document to vote, vowing to “do all I can” to have it added to the list of valid identification.
Labour said the government has had years to ensure the card was included, having begun rolling out the scheme in 2019.
Politics
Labour has ‘searching’ to do after losing votes in areas with high Muslim population, Jess Phillips says
The Labour Party has some “searching” to do following its underperformance in areas with a high Muslim population, according to MP Jess Phillips.
Speaking to political editor Beth Rigby on the Electoral Dysfunction podcast, the Birmingham Yardley MP said her party will have to “wake up and face” the issues that lead to it losing seats to the Greens, independents and the Workers Party of Britain.
Ms Phillips said: “There are some issues with regards to independents and Greens that the Labour Party is going to have to wake up and face tomorrow morning, Monday morning, whenever it is.
👉 Listen above then tap here to follow Electoral Dysfunction wherever you get your podcasts 👈
“There are some results in places, you know, Labour heartlands, where they maintain the council, of course, in places like Newcastle where the Greens are making strides.
“I very much expect, as the mayoral votes come in, that in places like Birmingham, Bradford, places with high Muslim populations, as we’ve seen overnight in Oldham, that the Labour Party will have some questions that they have, and some searching to do themselves.
“However, you cannot spin it any other way than this is a good night for the Labour Party.”
Analysis from Sky News shows that areas with a Muslim population below 5% saw the Labour Party’s vote share increase by 1.1 percentage points.
But areas with a Muslim population above 20% saw Sir Keir Starmer’s party lose 17.9 points from their vote share.
Local election results: Follow them as they come in here
One of the issues that is thought to be impacting the Muslim vote is Labour’s stance on the Israel-Hamas war.
Labour lost control of councils in Oldham and Kirklees, with victories for independent candidates opposed to the party’s stance on the war in Gaza.
It is hard to crystallise the exact impact on the elections, as a number of Labour councillors have defected from the party over Labour’s stance on the Middle East conflict.
George Galloway’s Workers Party of Britain also targeted Labour seats on the issue of Gaza, and won four – including unseating the deputy leader of Manchester council Luthfur Rahman in Longsight.
The BBC reported that Labour were pessimistic about their chances in the race for the West Midlands mayoralty – which covers Ms Phillip’s constituency – with one journalist saying a Labour source told them: “It’s the Middle East, not West Midlands that will have won Street the Mayoralty. Once again Hamas are the real villains.”
This was decried by the Labour Party on the record, with shadow paymaster general Jonathan Ashworth saying: “This is utterly unacceptable. I’m pleased the Labour Party have quickly and rightly condemned it.
“This is a racist quote which has not come from anyone who is speaking on behalf of the party or whose values are welcome in the party.”
Yvette Cooper, Labour’s shadow home secretary, was asked on the Politics Hub with Sophy Ridge about whether the party’s stance will change.
She said the party does “recognise” the party’s stance on the conflict has been a “factor in some areas”.
Ms Cooper added there were areas where Gaza was “partly” a factor and there were also “council factors” as well.
Keep up with all the latest news from the UK and around the world by following Sky News
She added: “So it’s lots of different things.
“But undoubtedly many people feel really strongly about this – and rightly because tens of thousands of people have been killed, including the majority of them women and children.
“We desperately need an immediate ceasefire, but we have the hostages released. We need the urgent humanitarian action that’s needed.”
We went into this set of local and mayoral elections with two big questions: Is Labour on course for a majority and how bad is it going to be for Rishi Sunak?Â
On the Sunak question, it’s a very clear-cut story.
The Tories are having as bad a night as their worst nightmare.
There is a 19-point drop in the Conservative vote compared with the 2019 general election – one of its worst performances ever.
But it’s not an all-out win for Labour, either.
As it stands on these results, the party is not on course for an outright majority at the general election, according to our election expert Professor Michael Thrasher.
The projected National Equivalent Vote (NEV) share – the model we use to translate local council elections into a nationwide vote share – puts Labour on 35%, short of the 40%-plus territory some see as needed to catapult Sir Keir Starmer into No 10 and way off what Blair was hitting in the 1995 and 1996 local elections ahead of his massive landslide.
If you want to benchmark against how it compares to Blair’s performance in the run-up to 1997, in the 1995 local elections, Labour achieved an NEV of 47%, while in 1996 the party hit a NEV of 43%.
So what might that mean for the maths in the House of Commons?
The Tory majority is wiped out – with Sunak projected to win a 25% vote share – and Labour becomes the largest party in parliament, but 32 seats short of an outright majority.
That would give them a gain of 93 seats to 294, with the Tories dropping 130 seats to finish with 242.
The Lib Dems would add 30 seats to have 38 MPs, with others up seven on 66.
That raises questions for Labour.
While the country is clear in these results that the government is the problem, they seem less sold on whether Keir Starmer is the answer.
👉 Listen above then tap here to follow Electoral Dysfunction wherever you get your podcasts 👈
Of the 260 seats lost by the Conservatives in the council elections as of 5pm on Friday, Labour has picked up less than half as the vote goes to independent and smaller parties.
Labour will argue two things: that they are winning in key battlegrounds across the country they need to win a general election, while voters are likely to turn out in bigger numbers and vote for the main parties when it comes to selecting MPs rather than councillors.
Labour insiders tell me it’s “wrong” to say they are not on course to win a general election.
“We are very happy with the efficiency of the vote from every corner of the country, from Hartlepool down to Thurrock, from Avon and Somerset up to Redditch, millions of people have sent out a message so loud and clear that even the prime minister in his private jet must have heard it,” said one senior figure.
“Labour’s on course to win a majority. We are very happy with where we are. Others and independents won’t get 24% in the general election.
“The voter distribution is where we need to be. In places like Tees Valley we have a huge swing.
“Where do you think all those smaller and independents are going at a general election where there is only a choice of two parties?
“A nine per cent lead is more than enough to win a majority and we are winning the seats we need to win a majority.”
Local election results: Relief for Sunak in key mayoral race
And there are some signs of direct transfer of seats from Tory to Labour in key constituencies.
Rushmoor, a council Blair never won and has been Conservative for 51 years, has switched.
Redditch, in West Midlands, was a straight swap to Labour.
In Swindon, another general election bellwether, Labour extended their lead.
“It’s not just the Tories losing, it’s us winning Rushmoor, Redditch. Whoever wins Redditch wins the country, Thurrock, Hartlepool,” the senior figure added.
“So we are winning in every type of seat, the Red Wall and the Blue Wall.
“Take Rushmoor. The position of a changed Labour Party is showing. Very satisfying that in a general election year, when the Tories are trying to use national security as a dividing line, they lose the home of the British Army.”
For the Tories, it’s a horror show – pure and simple. In Welwyn Hatfield, Portsmouth and Peterborough they are hitting their lowest seats ever, passing records set in 1996 when Blair was Labour leader and on the cusp of a landslide.
Please use Chrome browser for a more accessible video player
Analysis: Local election results
But for all the good news for Labour, this is not a slam dunk by any means.
Because, in a nutshell, for all the seats the Tories are haemorrhaging, Labour is not by any means always their main beneficiary, as independents and smaller parties prosper from Conservative decline.
So take the nightmare of Peterborough for the Tories – Labour did well, but it was independents that picked up more seats.
Harlow is the same, with the party unable to unseat the Tories in a council they lost in 2021. The Conservatives lost 11 seats, but seven of those went independent rather than to Labour.
Labour is also struggling in some areas as tensions over the Israel-Hamas war are playing out at the ballot box.
Labour lost several seats to independents in Muslim majority wards, including in Blackburn with Darwen where the Labour vote share was down more than 20 points.
Keep up with all the latest news from the UK and around the world by following Sky News
In the Muslim area of Elswick in Newcastle, the Labour vote share plummeted and this time the Greens gained.
The Greens’ co-leader Carla Denyer told Sky News the win was predominantly because of Gaza.
The Greens are picking up seats from the Conservatives too.
The Lib Dems so far are underwhelming after a soaring performance last year, they could pick up when results from the South West and South East start coming in.
There are still plenty of results to go, but what is clear from the counts so far is that Sunak’s Tories are into John Major territory in these last big ballot box tests before the general election.
But what is less clear-cut is whether Sir Keir Starmer is riding the sort of New Labour wave that brought Blair crashing into Downing Street with a landslide in 1997.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Environment12 months agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports6 months agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Sports4 weeks agoStory injured on diving stop, exits Red Sox game
-
Technology3 years ago
Game consoles were once banned in China. Now Chinese developers want a slice of the $49 billion pie