There was a good deal of anticipation around the UK Spring Budget 2024, especially as chancellor Jeremy Hunt indicated that small businesses were important to him during the Spring Budget speech.
When the Budget proposals came out, however, the response from the SME industry was mixed. The general consensus was that much more could have been done to support UK small businesses, especially given that elections are just around the corner.
In this blog post, we will go into the highlights of what was announced at the UK Spring Budget 2024 speech, and what small businesses have to say about it.
Highlights of the UK Spring Budget 2024
Business taxes
- In a welcome move, the VAT Registration threshold will go up from £85,000 to £90,000 in April 2024 — the first increase in seven years — while the deregistration threshold will drop from £83,000 to £88,000. For VAT return services in Kent, please get in touch.
- The Recovery Loans Scheme that was implemented during the pandemic will be extended until March 2026, with £200 million of funding, under the new name of Growth Guarantee Scheme.
- The energy profits levy was extended until March 2029, although legislation will be included to remove it once prices become normal again.
- Films with production budgets of under £15 million will be able to claim an Independent Film Tax credit of 53% on qualifying expenses.
- From April 2025, tax reliefs will be set permanently at 45% for museums, galleries, theatres, and orchestras and at 40% for non-touring shows.
Personal taxes
- In another welcome move, employee National Insurance Contributions (NICs) will be reduced from 10% to 8% from April 2024, while self-employed NICs will be reduced from 8% to 6%.
- The higher Capital Gains Tax rate on residential property will be reduced from 28% to 24%, effective April 2024.
- In what was seen by many as a controversial move, the Furnished Holiday Lettings scheme will be abolished from April 2025, with an objective to encourage more locals to be able to rent homes in their own towns. This will be a real hit for landlords in this sector.
- An extra £5,000 tax-free ISA allowance has been announced for investing specifically in UK-listed businesses. This is in addition to the existing £20,000 tax-free allowance.
- The non-domicile tax regime will be abolished from April 2025, after which non-domicile UK residents do not have to pay tax on foreign income during the first four years of their stay here, but will be subject to UK taxation after this period.
- National Savings & Investments bank (NS&I) will launch new British Savings Bonds in April 2024 that will offer a guaranteed interest rate, fixed for three years.
Duty rates
- Fuel duty rates have been frozen for another 12 months, while alcohol duty has been frozen until February 2025.
- Air passenger duty will be increased for business-class and first-class travellers, although not for economy, short-haul and domestic travellers.
- Stamp duty relief for those purchasing more than one property at a time will be abolished from April 2025.
- A new duty will be imposed on vaping from October 2026, along with an increase in tobacco duty to discourage smoking.
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Child benefit reforms
The chancellor announced some welcome news from working parents.
At present, parents have to contend with the High Income Child Benefit charge, by which for every £100 they earn above £50,000, they have to pay a 1% charge on child benefit payments, and by the time they earn £60,000, the benefits stop altogether.
However, going forward, the earnings threshold for High Income Child Benefit will go up to £60,000, while the taper threshold will go up to £80,000.
As a result, it is expected that around 500,000 families of working parents with young children will each save £1,300 a year.
In addition, plans are underway to modify the High Income Child Benefit charge to reflect household income rather than individual income by 2026.
This will make it more equitable, as currently a couple stands to lose child benefit if one of them earns £60,000, even if the other earns nothing.
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What do small businesses think of the UK spring budget 2024?
The increase in VAT registration threshold has been welcomed wholeheartedly by startups and SMEs and those who speak for them.
Andy Chamberlain of Association of Independent Professionals and the Self-Employed (IPSE) noted how it would remove barriers to the growth of UK’s smallest businesses.
Alex Henderson from PwC appreciated not only the reduction in the tax cost but also in the removal of the administrative burden of having to register/deregister for VAT. The reduction of self-employed NICs was welcomed too.
However, given the many significant challenges that UK small businesses currently face, especially related to costs, the UK Spring Budget left much to be desired.
For instance, Dr Roger Barker of the Institute of Directors expressed concern that the Budget was designed more to rally political support than to actually bring about long-term economic change.
He brought up that the Budget had very little to address the deep-rooted skills gaps in the UK economy, although he acknowledged that the child benefit reforms would help to bring more people back into the workforce.
Shevaun Haviland of the British Chamber of Commerce also mentioned that as likely the last fiscal event before the General Election, more could have been done to boost business confidence.
Tina McKenzie of the Federation of Small Businesses was more positive about the changes, but also expressed that many entrepreneurs would have hoped for more support for the tough decisions they have to make every day as small business owners.
Final words
Opinions are mixed on the new budget from all quarters, and several moves may be completely unexpected for small businesses who were hoping for more support.
As a UK small business owner, it is vital that you speak to your accountant about exactly how the new changes affect you, so that you can stay prepared when they come into force. And we at Bradleys Accountants are forever ready to help you with any query. Contact us today.
