Welcome to HL's reimagined News, Insights and Research experience. Find out more

A financial adviser’s view on the 2024 Spring Budget

From a 2p cut to National Insurance to changes to the high-income child benefit charge, we share a financial adviser’s view on the 2024 Spring Budget.
Businessman looking down at Houses of Parliament and River Thames

Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

While the cut in National Insurance (NI) won’t help pensioners, it will help lots of working families, giving much needed breathing space.

However, with no change to the freeze in tax thresholds, more and more will suffer ‘fiscal drag,’ finding themselves in higher tax brackets.

What is fiscal drag?

Well, if income rises with inflation, but tax allowances remain frozen, more people are dragged into paying higher tax.

This, along with reductions in the capital gains tax (CGT) allowance (falling to £3,000) and the dividend tax allowance (falling to £500) from 6 April, underlines the importance of using your tax allowances.

Use our Capital Gains Tax Calculator to see how the cut to the allowance could increase your tax bill next tax year.

Here’s how the cut to dividend and CGT allowances will reduce the amount of tax-free income for basic-rate taxpayers from 6 April, the start of the new tax year.

This is for illustrative purposes only. Your eligibility for and the amount you’re entitled to for the personal allowance, starting rate for savings and personal savings allowance depends on your personal circumstances.

This article isn’t personal advice and is based on our understanding of the Budget. Pension, ISA and tax rules can change, and any benefits depend on your circumstances. Tax rates and bands are different for Scottish taxpayers. If you’re not sure what’s right for you, ask for financial advice.

What can you do?

If you can, consider using your ISA allowance before the end of this tax year – that’s by midnight on 5 April.

Making the most of your ISA allowance, before it’s lost, is one of the best ways to save on paying tax. Unlike pensions, any ISA allowance not used in a tax year is lost and can’t be carried forward.

Remember, children also have an ISA allowance – maximising the use of ISAs across the family, like with a Junior ISA, can help you invest for their future, and save on paying tax on gains and income from the investments.

High-income child benefit charge – what’s changed?

The government have announced they’ll be changing the higher-income child benefit charge. From April, it’ll raise the threshold from £50,000 to £60,000 and the top level of withdrawal to £80,000.

This will move 170,000 families out of this charge and the government estimates nearly half a million families will save an average of around £1,260 per year.

It’s good to see the increase in the threshold, halving the rate at which child benefit is repaid. It’s also particularly pleasing to see the recognition of how unfair the charge is to single parent families.

We welcome the news that from April 2026, assessment will be on a household basis – reform that’s long overdue.

Those still caught should consider using the money saved by the cut in NI to contribute to pensions, helping reduce, if not remove, the high-income child benefit charge. That’s because pension contributions can help lower the amount of income that counts towards the threshold which could take you below it.

Remember, you can only usually access money in a pension at 55 (rising to 57 in 2028).

Want to know how the Spring Budget impacts your finances?

If you’d like an expert on financial planning, like Didi, to help you make the most of your tax allowances, book a call with our advisory helpdesk.

They won’t provide personal advice on the call, but they’ll help you decide if advice is right for you and discuss the costs involved.

If you choose to go ahead, they’ll put you in touch with one of our expert advisers.

While we can advise you on how to make the most of your tax allowances through financial planning, if you need complex tax calculations, we recommend speaking to an accountant.

Don't miss out on our Budget 2024 coverage

Keep up to date with all news, insight and analysis from the 2024 Spring Budget.

Latest from Spring Budget 2024
Personal Finance Newsletter
Sign up for Monday Money Matters. Get the top stories from HL, including top tax-saving tips and the latest on pensions, savings, annuities and the housing market.
Written by
Didi Ager
Didi Ager
Chartered Financial Planner

Didi has an impressive career in finance spanning three decades. After graduating with a degree in Banking & International Finance, Didi began her career specializing in foreign exchange in the city before becoming a senior investment manager. Her experience in institutional investing has given her a good understanding of markets and investor behaviour.

Our content review process
The aim of Hargreaves Lansdown's financial content review process is to ensure accuracy, clarity, and comprehensiveness of all published materials
Article history
Published: 8th March 2024