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2024 Spring Budget - What it Means for SMEs
Cuts to National Insurance, an increased VAT threshold, and frozen alcohol duty—will these help businesses in the cost-of-living crisis?
Chancellor Jeremy Hunt’s Spring Budget has indeed been wrought with controversy since its announcement on Wednesday. The primary change that has the media abuzz and may pose one of the most significant changes for British businesses is that National Insurance is being cut by a further 2%. This means that for a lot of British workers, National Insurance will have dropped from 12% to 8% in less than six months.
Business owners will need to update payroll before these changes come into effect on April 6th. National Insurance is also being cut for self-employed individuals earning under £50,270 – dropping from 8% to 6%. The proposed cuts are set to save the average self-employed worker roughly £650 a year.
In addition, the Chancellor has promised to offer additional relief to SMEs by raising the VAT registration threshold to £90,000. The current threshold, which sits at £85,000, poses an additional financial and administrative burden for growing businesses that were already under pressure during the recession.
The 2023 Autumn Budget introduced full expensing, a temporary allowance offering start-ups the opportunity to claim 100% of their expenditure within their first year. In the Spring Budget, this initiative was made permanent and extended to leased assets, which may be a breakthrough for enterprises relying heavily on finance.
Holiday-let owners may be disappointed to learn that the government is abolishing the Furnished Holiday Lettings Regime, which allowed them to save thousands on Capital Gains and Income Tax.
The government is freezing alcohol duty in a bid to support pubs across the country. But pub owners have responded that this may be too little, too late, as thousands of bars, pubs, and restaurants have closed since 2020.
During the announcement, Hunt pledged to help growing businesses and families. This legislation may be the current government’s last chance to win the nation’s vote before a General Election, predicted for May.
Related: Spring Budget 2024 - 5 Property Takeaways & How to Get a Limited Company Buy to Let Mortgage
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