The Spring Budget 2024 contained some important personal tax changes, albeit few of them came as a great surprise due to advanced briefings.

As with the Autumn Statement, the key takeaway was that despite tax cuts in certain areas, many people will end up paying more tax overall next year.

The Institute for Fiscal Studies estimates that by 2028, the UK’s tax burden will hit its highest levels since the second world war.

The main reason for this is the ongoing process of fiscal drag, whereby the current freeze on income tax thresholds and allowances pushes people into higher tax brackets.

As a result, the number of people paying tax at 40 per cent has increased by 40 per cent in the past three years.

For employed and self-employed workers

Following a similar move in the Autumn Statement, the headline tax cut was a further 2 per cent reduction in the main rate of national insurance.

This latest cut represents a saving of £448.60 next year for a worker earning £35,000. However, the benefit of this tax cut is capped at £754 per year, which is the amount that will be saved by earners on more than £50,270 a year.

Targeting national insurance was a more affordable option for the chancellor than cutting income tax because it is only paid by workers.

It is reported that he had limited headroom for major tax cuts and could be holding back for further pre-election giveaways.

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