A financial adviser’s view on the 2024 Spring Budget

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.

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 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.