Pessimism over the prospects of swingeing tax cuts in the chancellor’s Spring Budget including tax breaks for private medical insurance (PMI) have proven prescient.
Earlier today, ahead of chancellor Jeremy Hunt’s Spring Budget, Health & Protection discovered that while advisers wanted PMI tax breaks, they thought there was zero chance of it actually happening.
And these advisers were proven right.
However, this afternoon Hunt did deliver a number of tax cuts for individuals and business.
He told MPs from 6 April national insurance will be cut by another 2p – falling from 10% to 8%, with self employed NI falling from 8% to 6%.
This, he said, would mean an additional £450 a year for the average employee or £350 for the self employed.
Hunt also revealed that government will abolish the current tax system for non-doms and replace it with a “modern, simpler, fairer residency based system”.
This means that from 25 April, new arrivals to the UK will not be required to pay any tax on foreign income and gains for their first four years of UK residency. After four years those who continue to live in the UK will pay the same tax as other UK residents.
In November Labour pledged to abolish non-dom tax status to invest an extra £1.1bn to cut NHS waiting lists and to help get people back to work.
And in a tax break for SMEs, Hunt said to reduce the “administrative and financial impact” of VAT, he would be increasing the VAT registration threshold from £85,000 to £90,000 from 1 April.
He said this would “bring tens of thousands of business out of paying VAT altogether and encourage many more to invest and grow”.