The 2024 Spring Budget And The Impact it Has On Your Business

Navigating the 2024 Spring Budget: Insights into its Business Impact

It’s crucial to stay informed about the latest developments that could impact your bottom line. The 2024 Spring Budget brings forth a mass of updates, each with its own implications for businesses across the UK. This budget has been coined the ‘Budget for Long Term Growth’, the focus is said to be on delivering lower taxes, more investment, and better public services.

We’ll summarise these changes and explore what they mean for you.

1. National Insurance Cut: Simplifying the Payroll Process

One of the most talked-about announcements is the further reduction in employee National Insurance contributions by two percentage points. For employers, this means adjusting payroll processes before the new rate of 8% takes effect on 6 April. But what about self-employed individuals? The changes are equally significant, with Class 2 contributions being scrapped entirely and Class 4 contributions slashed from 9% to 6% on profits between £12,570 and £50,270. These cuts, combined with previous reductions, are expected to save the average self-employed worker £650 annually.

2. Increased VAT Registration Threshold: Easing the Financial Burden

To alleviate the administrative and financial burden on small businesses, the VAT registration threshold will rise to £90,000 from April 2024. This adjustment is anticipated to exempt approximately 28,000 small businesses from VAT obligations, providing much-needed relief.

3. Rise in National Minimum and National Living Wages

The rise in the National Living Wage (NLW) and the National Minimum Wage (NMW) recommended by the Low Pay Commission was accepted by the Government in November 2023. This increase means that the NLW rises by 9.8% to £11.44 from 1 April 2024.

The size of your overall wage increase will depend on the age of your employees and whether they’re currently working as part of an apprenticeship scheme. However, the increase in your payroll costs is something to factor into your financial planning for the year.

The ‘Budget for Long Term Growth’, focused on delivering lower taxes, greater levels of investment, and better public services.

4. Full Expensing for Leased Assets: A Boost for Business Investments

There will be an extension of full expensing to leased assets which promises substantial tax relief. This initiative allows businesses to deduct 100% of qualifying investments from taxable profits in the year of expenditure, fostering investment in essential assets such as machinery, vehicles, and office equipment.

5. Fuel Duty Freeze: Providing Relief for Motorists

In a move welcomed by sole traders and car-dependent businesses, the freeze on fuel duty has been extended until March 2025. This decision prevents a potential 13-percentage-point hike in fuel duty, saving the average car driver £50 annually.

6. Support for Hospitality: Sustaining the Sector

Acknowledging the vital role of hospitality businesses, the Chancellor announced an extension of the freeze on alcohol duty until February 2025. This measure aims to support pubs and hospitality establishments by averting a potential increase in alcohol prices.

7. Recovery Loans: Fuelling Business Growth

A commitment of £200 million in funding signals continued support for small businesses through the Growth Guarantee Fund. Designed to facilitate investment and growth, this initiative builds on the success of the post-pandemic Recovery Loan Scheme, offering accessible financing options for eligible businesses.

8. Furnished Holiday Lettings Regime Abolition: Simplifying Taxation

The abolition of the Furnished Holiday Lettings tax regime streamlines taxation for rental income from qualifying properties. This move, effective from April 2025, simplifies tax compliance while generating additional revenue for the government.

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