Martin Lewis: What the Spring Budget 2024 means for your pocket – national insurance cut, frozen tax rates, Child Benefit boost and more

Watch: Martin Lewis's Spring Budget 2024 briefing

A round-up of today's announcements

Follow the links for more info:

• Millions of workers will pay less national insurance from April as rates are being cut AGAIN for both employed and self-employed workers – though some will still be worse off due to frozen personal tax thresholds. Use our updated National insurance & income tax calculator to see your new take-home pay.

• Child Benefit rules will see a shake-up to end 'unfairness' in the system, in a major campaign win for Martin and MSE.

• The £90 debt relief order fee will be scrapped in England and Wales.

• Universal Credit claimants will get more time to pay back 'Budgeting Advances'.

• Funding for childcare providers confirmed, to help them deliver the promised 'free' (funded) childcare hours for parents.

• Vulnerable households will get £500 million in extra support, through an extension of the Household Support Fund.

• NS&I will launch 'British Savings Bonds'.

• A new 'UK ISA' will be introduced.

• Air Passenger Duty will rise in 2025/26.

• Vaping products will be taxed more from 1 October 2026.

• Alcohol duty has been frozen (again) until 1 February 2025.

• Fuel duty has also been frozen again.

While the following points weren't directly mentioned in the Chancellor's speech, the Spring Budget has also essentially confirmed:

• Personal tax thresholds will remain frozen, so many will end up paying more in tax.

• No changes to Lifetime ISAs, despite our calls for an overhaul to ensure savers aren't fined to access their own money.

Another national insurance cut for workers

From 6 April 2024, national insurance rates will be cut for around 29 million workers:

• Employees will see the rate they pay on annual earnings between £12,570 and £50,270 drop from 10% to 8%. This follows an earlier cut from 12% to 10% on 6 January 2024. The average worker, earning £35,400 a year, will save over £900 annually as a result of the two rate cuts, according to the Government.

• Self-employed workers will see the rate they pay on annual profits between £12,570 and £50,270 drop from 9% to 6%. This – combined with the previously-announced abolition of mandatory class 2 contributions – will save the average self-employed person on £28,000 a year around £650 annually, the Government says.

However, despite these new rate cuts, some employees will still pay more tax and national insurance overall due to freezes to tax thresholds – for more info on this, see our National insurance rate cuts MSE News story.

Child Benefit shake-up to end 'unfairness' in system

In a major campaign win for MoneySavingExpert.com and its founder Martin Lewis, the Chancellor has confirmed that the 'grossly unfair' Child Benefit rules – which require anyone earning between £50,000 and £60,000 and claiming the benefit to pay some of it back – will be fixed.

In the short term, you won't have to pay any of your Child Benefit back until you start earning £60,000 a year, and you'll only lose the benefit entirely if you earn above £80,000. A consultation will also consider whether to change Child Benefit eligibility to being based on household income, rather than on individual income, by April 2026. For the full details, see our Child Benefit campaign win MSE News story.

Debt relief order fee scrapped in England and Wales

Debt relief orders (DROs) in England and Wales are granted by the Insolvency Service and are specifically aimed at people on low incomes with debts of less than £30,000.

The order freezes your debt repayments and interest for 12 months, and if your financial situation hasn't changed at the end of this time, then your debts are written off.

Currently, DROs have a £90 administration fee – but, in a welcome move, this will be scrapped from 6 April 2024.

In addition, from 28 June 2024, the maximum amount of debt you can have under a DRO will rise from £30,000 to £50,000 – meaning more people will be able to access this debt management option. Plus, you'll be able to keep your car worth up to £4,000 (up from £2,000 currently).

Northern Ireland's debt relief order scheme is very similar, but has slightly different eligibility criteria – and its £90 fee ISN'T being scrapped (at least not for now). A Department for the Economy spokesperson told us "no decision has been made yet" about the fee.

DRO's are not available in Scotland. Instead, there is an equivalent arrangement known as the 'minimal asset process', which is already fee-free.

If you're struggling with debt, see our Free debt help guide.

Universal Credit claimants will get more time to repay 'Budgeting Advance' loans

These interest-free loans are available if you're claiming Universal Credit and need funds for an emergency, such as replacing a broken cooker.

You pay them back through your regular Universal Credit payments – you get paid less until the loan is repaid. Currently, you have 12 months to repay the loan. But, for new budgeting advances taken out from December 2024, the default repayment period will be extended to 24 months.

Unfortunately, you won't be able to extend an existing budgeting advance – any existing loans taken out before the change has come into effect will still have to be repaid within 12 months. 

The Department for Work and Pensions, which is responsible for Universal Credit, told us the change is being implemented from December because it needs to make changes to its systems to enable it.

See our Universal Credit guide for more info on how the benefit works and to check whether you can claim it.

Interest-free 'Budgeting Loans' for those claiming certain benefits other than Universal Credit are already repayable over two years. 

Funding for childcare providers confirmed

In last March's Budget, the Chancellor announced a large expansion to the Government's childcare support scheme in England, which offers up to 30 hours of 'free' (in reality, funded) childcare each week.

To support the sector to deliver this, the Government has now confirmed the formula it'll use to increase the hourly rate providers are paid from April 2025 to April 2027. It says this will mean an estimated additional £500 million of investment over that period.

Groups working in the sector have cautiously welcomed the move, but warned more investment will be needed, alongside a strategy to get more people working in the field:

• Sarah Ronan, director of the Early Education and Childcare Coalition (an independent group of more than 30 organisations working across the sector), said: "We're pleased that the Chancellor has listened to us and offered some certainty to providers over the next two years.

  "That said, it is disappointing that [the] announcement was not accompanied by an increase in funding for current rates [until April 2025], especially three and four-year-olds, which are critically low, as well as a new workforce strategy."

• Neil Leitch, chief executive of charity Early Years Alliance (which represents 14,000 members and supports them in delivering care and learning), said the announcement "should help prevent the current funding gap from widening even further over the coming years".

  "But", he added, "much more support – including significant long-term funding and a comprehensive workforce strategy – is crucial if nurseries, pre-schools and childminders are to be to able to sustainably deliver both existing and upcoming entitlement offers."

Other measures announced by the Chancellor in his Spring Budget

• Vulnerable households will get £500 million in extra support. The existing Household Support Fund  scheme in England, which had been due to end on 31 March 2024, will be extended for six months, to September 2024 (other UK nations will also get funding under the Barnett formula).

  The scheme gives local authorities funding to support vulnerable households with paying for essentials, such as energy and water bills, rent, food and more – the exact form of the support varies council-by-council. You can contact your council to find out what help it offers, whether you're eligible, and how to apply. 

• National Savings & Investments (NS&I) will launch 'British Savings Bonds'. Starting in 'early April', these savings accounts will offer a fixed rate for three years on deposits of between £500 and £1 million – though we don't yet know what that rate will be. For the current top-paying savings, see our Top savings accounts guide.

• A new 'UK ISA' will be introduced. This will give savers an additional £5,000 tax-free allowance a year to invest in "UK-focused assets". This is in addition to the existing ISA allowance of £20,000 a year. However, we don't yet know when this new ISA will become available as the Government says it still needs to "consult on the details".

• Air Passenger Duty (APD) will rise in 2025/26. This is a charge paid by airlines, but often passed on to passengers through the fares they pay. APD rates for economy seats will rise by the forecast Retail Prices Index (RPI) measure of inflation, while the rates for premium economy, business class and first-class seats will be even higher.

• Vaping products will be taxed more from 1 October 2026. A new 'vaping products duty' will be introduced from this date. Higher rates will apply to liquids with more nicotine, with the rates ranging from between £1 to £3 per 10ml of liquid.

  There will also be a 'one-off' increase in tobacco duty on 1 October 2026, which the Government says will "maintain the current financial incentive to choose vaping over smoking".

• Alcohol duty has been frozen (again) until 1 February 2025. The freeze was initially announced in the Autumn Statement and was supposed to end on 1 August 2024, but has now been extended by another six months. However, this is largely a boost for alcohol producers, pubs and the hospitality sector, as firms and venues don't have to pass any savings on to consumers (and many don't).

• Fuel duty frozen yet again. This UK-wide tax on petrol and diesel will remain at 52.95p a litre for the next 12 months, as the temporary 5p cut has been extended again. For help cutting your fuel costs, see our Cheap petrol and diesel guide.

Income tax and national insurance thresholds remain frozen until 2028

Despite the cut to national insurance rates, both national insurance and income tax thresholds – which determine when you start paying each tax – will remain frozen until April 2028 (as announced by the Government last year).

For some, this will offset both the Autumn Statement and Spring Budget cuts to national insurance, as shown in the below graph from the Institute for Fiscal Studies:

Note: We asked the IFS why the chart shows a rise in tax liability for those earning between £9,100 and £12,570 – given that you don't have to pay any NICs or income tax if you earn under £12,570. It told us the chart includes the impact of changes to employer NICs. The secondary threshold at which these start to be paid has been cut (in real terms) to £9,100 a year, and the IFS has assumed that this tax rise is fully passed through to employees.

Lifetime ISAs (LISAs) unchanged – despite our calls for a shake-up

MoneySavingExpert.com and its founder Martin Lewis have long campaigned for the Government to overhaul "dead duck" LISAs, so that savers buying a home that's now over the scheme's property price limit of £450,000 aren't hit by a 6.25% fine for accessing their own cash.

However, while no changes to the LISA were included in the Chancellor's speech today or in any of the Treasury's follow-up documents, it appears a shake-up "isn't off the table". See our LISAs campaign update for more info.