The Spring Budget 2024, delivered by Chancellor Jeremy Hunt on 6 March, was hailed as the “year of the SMEs” by the government. The budget contained several measures to support small business growth, reduce tax burdens, and boost investment. Here are some of the key announcements that will affect small businesses:
National Insurance cut
The government announced a further 2p cut in National Insurance contributions (NICs) for employees, bringing the rate down to 8% from April 2024. This will save a typical employee £600 a year. The government also confirmed that the NICs holiday for new businesses, which exempts them from paying employer NICs for the first year, will be extended until April 2025.
VAT threshold increase
The VAT registration threshold, which determines when a business has to charge and pay VAT, will be increased from £85,000 to £90,000 from April 2024. This will take over 28,000 small businesses out of the VAT system, saving them time and money on administration and compliance. The government also announced that it will simplify the VAT rules for small businesses, making it easier for them to account for VAT on a cash basis and use the flat rate scheme.
Capital Gains Tax reduction
The government announced a reduction in the higher rate of Capital Gains Tax (CGT) from 20% to 18% from April 2024. This will benefit small business owners who sell their assets or shares, as well as investors who back small businesses. For Residential properties – the current tax on second property disposals (disposal of your main residence is still exempt from capital gains tax) the tax will reduce by 2% also.
Full expensing extended
The government announced that it will extend the full expensing scheme, which allows businesses to deduct the full cost of new investments from their taxable profits, until the end of 2025. This will encourage businesses to invest in new equipment, machinery, and technology, boosting productivity and innovation. The government also announced that it will expand the scope of the scheme to include assets for leasing, such as vehicles and machinery, which will benefit small businesses that rely on leasing arrangements. This means that if you spend £10,000 (say) on new business plant and machinery, you will get tax relief on the whole £10,000.
Creative industries tax relief
The government announced that it will introduce new tax reliefs for the creative industries, such as film, television, video games, and animation, from April 2024. These reliefs will allow eligible businesses to claim a tax credit of up to 25% of their qualifying expenditure, reducing their tax liability and increasing their cash flow. The government also announced that it will extend the existing theatre tax relief to cover live music and comedy performances, supporting the recovery of the live entertainment sector.
Alcohol and fuel duty freeze
The government announced that it will freeze the duty rates on beer, cider, wine, and spirits for another year, as well as the duty rates on petrol and diesel. This will support the hospitality and transport sectors, which have been hit hard by the pandemic and the energy crisis, and help consumers with the cost of living. There is a new vaping tax to be introduced in 2026.
These are some of the main highlights of the Spring Budget 2024 for small businesses. The government claimed that these measures will help small businesses to recover, grow, and thrive in the post-pandemic economy. However, some critics argued that the budget did not go far enough to address the challenges faced by small businesses, such as rising costs, skills shortages, and regulatory barriers.
Call LeeP Accountants if you believe any aspect of these might impact you or your business. 01733 699033