The UK Treasury has claimed the latest Budget delivered by Chancellor Jeremy Hunt will put £620 a year ‘back into the pocket’ of workers in Northern Ireland this year.
A highly publicised 2p cut in national insurance for employees and the self-employed formed the centrepiece of Wednesday’s Spring Budget.
But the Chancellor also announced more help with child benefits for parents earning more than £50,000, and cut the top rate of capital gains tax on property sales - arguing that reducing it from 28% to 24% will bring in more money because of increased activity.
But as he insisted those with the “broadest shoulders” will pay more, he committed to scrapping the non-dom status for wealthy foreigners, putting the £2.7 billion a year raised as a result towards tax cuts.
Mr Hunt claimed the average earner now has the lowest effective personal tax rate since 1975.
But frozen income tax thresholds will see more people dragged into higher tax brackets as their earnings rise.
Independent analysis of Wednesday’s Budget suggests that workers earning less than £30,000 per year will be worse off overall, despite the latest national insurance cut.
Those earning in excess of £50,000 per year appear to fare best.
According to calculations from the Office of Budget Responsibility (OBR), there will be 2.7 million additional higher rate tax payers in the UK by 2028/29.
It will yield a net increase in tax receipts of £19.7bn.
Elsewhere, the Treasury said maintaining the 5p cut and freeze to fuel duty will save the average car driver £50 this year, while a freeze on alcohol duty has been extended until February 2025.
The plans to reform the high income child benefit charge represented perhaps the most significant change for middle-income earners announced on Wednesday.
The reform will see HMRC collect household level information to allow the charge to be assessed on a household basis by April 2026.
In the interim, Jeremy Hunt said the threshold at which the high income child benefit charge starts to be charged, will rise from £50,000 to £60,000 from April 2024.
The Treasury said families will gain an average of £1,260 towards the costs of raising their children in 2024/25.
The charge had been triggered when one parent in a household claiming child benefit has taxable income of £50,000 or more - but the threshold has been criticised for falling unfairly on the shoulders of single parents, as it is based on the income of the highest earner.
It has also meant that a couple could earn £49,999 each and still receive all their child benefit.
People whose income is over the threshold can get child benefit payments and pay any tax charge at the end of each tax year, or opt out of receiving payments and not pay the tax charge.
However, not receiving the benefit can have implications if one parent takes time out of work to look after children - as some people may have years where they do not pay enough national insurance (NI) to count towards the 35 years of contributions needed for a full state pension.
The government also announced on Wednesday that the rate at which the fee is charged will also be halved from 1% of the child benefit payment for every additional £100 earned above the threshold, to 1% for every £200.
This means that child benefit will not be withdrawn in full until a parent is earning £80,000 or more.
