Budget 2024: Wealthy Non-Residents to Foot the Bill, Taxes to Decrease

Author London Cult.
Category Business, Culture, People, Town
Date March 7 2024
Reading Time 2 min.

Budget 2024: Wealthy Non-Residents to Foot the Bill, Taxes to Decrease

Chancellor of the United Kingdom, Jeremy Hunt, has announced a radical step aimed at changing economic policy ahead of parliamentary elections: a £10 billion cut in national insurance spending by abolishing tax breaks for non-residents (which, according to Hunt, should contribute £2.7 billion to the country’s budget), along with other measures to increase revenue.

Hunt’s budgetary venture involves a plan to abolish the “non-resident” status, which allows wealthy, often foreign residents, to avoid taxes on income earned abroad. The “non-domiciled” status has often been utilized by billionaires living in London but not considering the UK their permanent home. Thus, they paid British tax only on income earned or transferred to the UK.

According to the Chancellor, the government will use the funds raised to finance tax cuts, alleviate the burden on families in difficult situations, and simultaneously stimulate economic growth. Another project in the new budget is a two percent reduction (to 8%) in national insurance contributions for 27 million workers, marking the second decrease in this tax in a short period: in 2023, the tax was lowered to 12%. It is forecasted that this move will save the average worker around £900 annually. However, despite ambitions, according to official data, the tax-to-GDP ratio still stands at 37.1%, the highest since 1948.

Overall, as experts note, Jeremy Hunt’s budget is aimed at various layers of society. For example, reducing the capital gains tax rate on property sales from 28% to 24% appears appealing to wealthier individuals, while plans to increase the child benefit threshold from £50,000 to £60,000 will ease the burden on middle-income families. The temporary reduction in fuel duty has also been extended, which will bring motorists £3 billion in 2024.

The Chancellor’s speech garnered applause from many Conservatives. However, as usual, the opposition met the proposal with criticism. Labour leader Keir Starmer called Hunt’s budget “the desperate act of a failed party,” citing 14 years of economic stagnation under the Conservatives’ leadership. Starmer failed to mention that Hunt borrowed the initiative to abolish tax breaks for non-residents precisely from Labour. Criticism also came from within the Conservative party, particularly regarding the same reform of taxation for non-residents, as well as the expansion of taxes on oil and gas companies. Scottish Tory leader Douglas Ross engaged in a heated dispute with Hunt and his predecessor as Chancellor, Rishi Sunak, over the proposed reforms, once again highlighting internal divisions within the party.

It is expected that the new legislation will come into effect by April. These timelines strategically coincide with pre-election calculations, as the government seeks to demonstrate tangible benefits of Conservative party policies to voters before the elections. Nonetheless, the consequences of economic decisions go far beyond mere figures and will determine the trajectory of the country’s future.

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