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11 Key Impacts Of The Spring Budget 2024

11 Key Impacts of the Spring Budget 2024 on Your Small Business

Read the summary of some of the key announcements that may affect your business.

by Credit Passport
6 MINS READ

The Chancellor of the Exchequer, Jeremy Hunt, delivered his Spring Budget to Parliament on Wednesday 6 March 2024. It contained a number of measures relevant to small and medium-sized enterprises (SMEs) across the UK. Here is our summary of some of the key announcements that may affect you and your business:

VAT threshold increase

One of the most welcome news for SMEs was the increase in the VAT threshold from £85,000 to £90,000, with effect from 1 April 2024. This means that more businesses will be exempt from charging VAT on their sales, or will have more time before they need to register for VAT. This will reduce the administrative burden and compliance costs for many SMEs, and allow them to keep more of their revenue. The Federation of Small Businesses (FSB) had campaigned extensively for this measure, and the Chancellor acknowledged their contribution in his statement.

Self-employed National Insurance Contributions (NICs) cut

Another significant win for SMEs was the reduction in self-employed NICs from eight per cent to six per cent, with effect from 6 April 2024. This will mean an average tax saving of £650 per year for self-employed individuals, according to the FSB. This follows the previous NICs cut secured by the FSB last autumn, which reduced the rate from nine per cent to eight per cent. The Chancellor said that this was a recognition of the contribution of the self-employed to the UK economy, especially during the pandemic. Meanwhile, employee NICs will fall from 10 per cent to eight per cent, benefiting both workers and employers.

Recovery Loan Scheme extension

The Recovery Loan Scheme, which was set up to support SMEs during the pandemic with Government-backed loans, will be extended by a further two years, until 2026. This was another measure that the FSB had campaigned for and was listened to by the Chancellor. The scheme will be renamed as the Growth Guarantee Scheme, in which the Government guarantees 70 per cent of loans of up to £2 million. The scheme will help SMEs access finance for investment, innovation, and expansion.

Fuel duty freeze

The current level of fuel duty will be frozen for 12 months, providing some relief for SMEs that rely on transport and logistics. The Chancellor said that this was a measure to support the recovery of the economy, and to help households and businesses with their costs.

Alcohol duty freeze

The Chancellor also announced that alcohol duty will be frozen at its current level until February 2025, benefiting SMEs in the hospitality and leisure sectors. The Chancellor said that this was a measure to support the pubs, bars, restaurants, and breweries that have been hit hard by the pandemic, and to encourage people to socialise and spend.

Creative industries support

The Chancellor announced several measures to support the creative industries, which include many SMEs. These include maintaining the current levels of Theatre Tax Relief permanently and introducing a 10-year 40 per cent relief on business rates for film studios in England. The Chancellor said that these measures were designed to boost the UK's cultural and creative sectors and to attract more investment and talent.

Childcare providers funding

The Chancellor announced that additional funding will be made available for childcare providers delivering parents' free childcare entitlement in England, in a move that the Government estimates will lead to 60,000 more parents entering the labour market over the next four years. This will benefit SMEs that employ parents who need childcare, as well as SMEs in the childcare sector.

Child benefit threshold increase

The Chancellor announced that the threshold at which the high-income child benefit charge kicks in will rise from £50,000 to £60,000, with effect from April 2024. This will benefit SMEs that employ parents who receive child benefits, as well as self-employed parents who claim child benefits.

Vape duty introduction

The Chancellor announced that an excise duty will be introduced on vapes from October 2026, alongside a one-off increase in tobacco duty. This will affect SMEs in the vape and tobacco industries, as well as consumers who use these products.

Holiday lets tax relief abolition

The Chancellor announced that tax relief on furnished holiday lets will be scrapped, affecting SMEs that provide holiday accommodation. The Chancellor said that this was a measure to ensure fairness in the tax system and to prevent abuse of the relief.

Training for self-employed guidance

Following FSB campaigning, HMRC has published new guidance around the tax deductibility of training costs for sole traders and the self-employed. This will help SMEs to claim tax relief on the costs of improving their skills and knowledge, and to invest in their professional development.

These are some of the main highlights of the Spring Budget 2024 for SMEs. For more details and analysis, please visit the FSB website or read the full Government budget here: Spring Budget 2024

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