Today, Chancellor Jeremy Hunt announced the Spring 2024 budget. The Spring budget focused heavily on tax cuts and investing in British business. Our blog highlights the main points of the budget which concern SMEs and entrepreneurs. 
 

Is the UK Economy in Recession? 
 

In late 2023 the UK economy fell into a recession. However, the recession is not expected to last long. Some economists, such as the Bank of England’s Andrew Bailey, have claimed the recession may already be over.

Bailey told MPs this is the ‘weakest recession’ in many ways. His forecast is hopeful that the economy is showing signs of an upturn.

However, even if the UK economy grows, many UK households and businesses are still facing rising costs. This means UK businesses and households are eagerly awaited some positive news in today’s budget announcement.

With the election promised to be this year, this budget could be the Conservative Government’s attempt at appealing to the electorate or delivering on their long-term goals.

What Did the Spring 2024 Budget Say? 
 

Changes to Tax
 

National Insurance 

Jeremy Hunt opens the budget by stating “Conservatives know that lower taxes promote higher growth”, hinting at the expected 2p cut to National Insurance Tax, a tax which only working people pay.

At the end of the budget, Hunt announces a 2p tax cut. For self-employed workers, this means your NI rate falls from 8% to 6% and for employed workers, your NI falls from 10% to 8%.

VAT Registration Threshold Goes Up

Hunt announces a rise of £5000 for the VAT Registration Threshold from £80,000 to £90,000. This means you now need to be earning £90,000 minimum as a business before you must register for VAT.

VAT registration for under £90,000 is optional, there are many reasons why you may sign up for VAT before reaching the minimum threshold.

Fuel Duty 

Fuel Duty will remain frozen for 12 months saving the average driver £50 a year.

Alcohol Duty 

Alcohol Duty will continue to be frozen until February 2025, cutting costs for businesses which buy and serve alcohol.

Vape Duty 

There will be a new tax on vapes to discourage non-smokers from buying them, particularly aimed at the younger generation. Alongside this, there is a one-off increase in tobacco duty to similarly discourage cigarette smoking.

Property Tax Changes 

A surprise tax announcement today is the reduction in capital tax gains from 26% to 24%. This means those earning money from residential properties, will pay less tax on the profit.

Another tax change concerning property is taxes on second homes being let as holiday rentals. Hunt says they will scrap tax breaks which make it more profitable for second homeowners to let their properties for short-term rentals.

Finally, Hunt also abolished stamp duty relief. For those hoping to buy more than one dwelling, you will no longer receive tax relief on your stamp duty.

Further Investments in ‘innovative’ industries 

Hunt also announced a further £100m ‘levelling up’ fund for investment in tech, life sciences, clean energy, and theatre. Alongside a rise in tax credits and the removal of a cap on VFX costs for the Film industry.

Investment is focused on developing the UK at the forefront of these industries and technologies. Particularly with tech, as Hunt claims he wants the UK to be ‘the next Silicon Valley’.

In life sciences, Hunt announced £650m to make the UK a vaccine manufacturing hub, following the strong performance of AstraZeneca during the Pandemic.

Other Changes to Note

Alongside these announcements, Hut also announced a ‘new’ British ISA, focused on investing in British business. ISA thresholds also increased from £20K to £25K. Moreover, the maximum salary for child benefits has risen to £60,000 with a future look at paying benefits based on a joint household income. Business class flyers will now pay an additional duty and around £7.7b has been promised to the NHS in order to ‘digitise’ operations.

There has also been £180m earmarked for projects based in the North East of England and a further £5m to renovate village halls.

Finally, the £90 charge for debt relief will be abolished and an extension granted to those suffering from debt repayments.