Spring Budget 2024: How it will impact your business

The Spring Budget 2024 was presented to Parliament by The Chancellor of the Exchequer Jeremy Hunt on Wednesday the 6^th of March. The Spring Budget is an annual statement during which the Chancellor announces their fiscal plan for the upcoming financial year, which runs from April until April in the UK. Typically much like the Autumn Statement, the Spring Budget covers topics such as tax, national insurance, and wider investment plans, all of which can have a significant impact on individuals and business owners.

In this article, we’ll look at some of the major announcements that are set to impact small businesses as discussed by the Chancellor in today’s budget, including:

• Alcohol and fuel duty freeze to continue until February 2025.
• Announcement of British ISA to encourage investment in UK businesses.
• New excise duty on vape products and increase in tobacco duty.
• Removal of existing holiday lettings tax relief.
• Changes to national insurance contributions.

We’ll also take a look at a couple of initiatives and reforms which could mean changes to the way your business receives funding and investment over the coming years. 

The first major announcement from Jeremy Hunt came with confirmation that the current freeze on alcohol duty will continue until February 2025. The freeze which was first announced during the autumn statement was set to expire in August 2024 but has now been extended until next year. This freeze was designed to help protect breweries, distilleries, restaurants, nightclubs and bars against increasing wholesale costs pricing businesses out of the market.

Speculation around the ‘British ISA’ has been confirmed today, with the announcement from the Chancellor that a new tax-free ISA will be available to investors who wish to invest up to £5,000 per year in UK firms. The aim of this is to encourage more investment in UK-listed businesses which will allow individuals to make further tax-free investments in addition to their existing ISA allowances.

Today, as expected by many, Jeremy Hunt has announced a new tax on vape products and has also announced an increase in tobacco duties. This new vape tax won’t come into force until October 2026.

Property owners who let out properties as holiday homes will see a change to the amount of earnings they are taxed on. The higher rate of property capital gains tax will be reduced from 28% to 24%, calling an end to the holiday lettings tax relief scheme.

In the recent Autumn Statement, the treasury announced a cut to national insurance contributions. In today’s budget, Jeremy Hunt announced that from April 2024, national insurance contributions will be reduced from 10% to 8% for employees, and from 8% to 6% for self-employed workers.

It has also been announced that there will be no changes to the existing income tax threshold or personal allowances. The basic rate tax of 20% will continue to start at earnings over £12,570.

For business owners specifically, the treasury has announced that the VAT registration threshold will be increased from £85,000 to £90,000 meaning that businesses can earn slightly more before becoming VAT registered. The Chancellor also announced an extension to the Recovery Loan Scheme until the end of March 2026. The scheme, which is set to be renamed as the 'Growth Guarantee Scheme' will offer SME's a 70% government guarantee on loans of up to £2m in Great Britain and £1m in Northern Ireland.

In the wake of the Spring Budget, it’s always important to consider what these announcements will mean for your business. Whether you run an SME or are a key part of a major corporation it is likely that today’s changes will mean that adaptations need to be made to your plan for the upcoming year.

Even if you don’t think any of today’s announcements will impact your business directly, tax cuts alone could impact the amount of disposable income your customers have and therefore could make them more likely to spend with you. However, rising costs elsewhere could put a stop to that if your business is unable to manage spending effectively. That’s why it’s important to ensure you understand the complexities of the Spring Budget to ensure you can manage your businesses finances efficiently during the coming tax year.

In addition to the announcements made that concern personal taxes, alcohol duty, holiday home taxes and the new vape tax, todays Spring Budget also highlighted further investment in the following areas

• Tax reliefs for the UK film industry.
• £45m to support medical research into dementia, cancer and epilepsy treatments.
• £230m investment in technologies to improve police response times.
• £3.4bn investment into NHS computer systems to increase capacity.

These investments come alongside the British ISA which was announced early on in today’s budget.

In addition to investments that have been announced, energy companies have today been informed that the governments windfall tax for energy companies will be extended for an additional year and will now be in place until 2029. Existing investment schemes in offshore energy will continue to be available for these companies. The extension of the windfall tax is expected to raise a further £1.5bn.

Lastly, Jeremy Hunt has today announced the abolishment of the non-dom tax status, which means non-domiciled individuals who earn money through foreign businesses and investments will have to pay UK taxes after they have been a resident for four or more years. The treasury calculates that this will raise £2.7bn by the end of the forecast period.

The Spring Budget is an opportunity for business owners to reconsider their financial plans for the coming tax year. Today’s announcements are likely to impact many markets, from how much spare cash your customers have, to changes in your daily running costs and how much tax your business pays.

If you’re a business owner, it’s important you take some time to read through today’s budget in order to truly understand what this might mean for your livelihood.

For more information on the Spring Budget 2024, visit the UK Gov website.