National Insurance to be reduced and vaping tax to be introduced as part of this year’s Budget.
UK chancellor Jeremy Hunt unveiled his budget for 2024 earlier this afternoon, and a reduction in national insurance contributions paid by workers was the standout feature in a financial update that comes in the year of a general election.
National Insurance payments will be cut from 10% to 8% from next month.
It is estimated that the 2p cut to national insurance would be worth about £450 a year for someone on a £35,000 full-time salary.
Among the other key features were the abolishment of the ‘non-dom’ tax regime, an increase in the allowance for ISA’s, and a new tax on vapes from 2026.
According to the Financial Times, Hunt forecasts the economy will expand by 0.8 per cent in 2024 and outlined a hope that real household disposable income per person can recover to its pre-pandemic level by 2025-26.
So what does this year’s budget mean for young people in particular?
The big one is that a new tax will be levied on vapes, starting from October 2026. Considering most buyers of vapes in this country are under the age of 25, the new tax will be celebrated by parents and doctors alike.
The government has proposed that a three-tier structure be introduced that will consist of £1 per 10ml for nicotine-free liquids, £2 per 10ml on liquids that contain the same or less nicotine per ml than an average cigarette and £3 per ml on liquids that contain more nicotine per ml than an average cigarette.
There will also be a one-off tobacco duty increase, which will preserve the “financial incentive to switch away from smoking”.
A rise in alcohol duty of 3 per cent, planned for August, has been postponed until February 2025, helping 38,000 pubs across the UK.
Hunt extended the “temporary” 5p-a-litre fuel duty cut for another 12 months, saying the average motorist would save £50 next year. The duty has been frozen since 2011.
Air passenger duty will be increased for non-economy travel.
APD on premium economy and business class flights will be hiked by more than 10% next year. It will add £66 in tax to a London-New York flight in business class, up to £647, from April 2025.
APD on a premium economy seat will rise £22 to £216 on a transatlantic flight, or from £26 to £28 on a short-haul flight.
In terms of the arts, the government has vowed to spend £26.4m on the National Theatre to upgrade its stages.
Furthermore, independent films with a budget of less than £15m will receive a new tax credit, and the Treasury has also promised to provide eligible film studios in England with 40% relief on their gross business rates until 2034.
And lastly, the NHS will get some support in the form of an additional £2.5bn this year to tackle issues including waiting lists.
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