With a general election potentially on the cards for this year, the 2024 Spring Budget is one of the last chances for the Chancellor to set out his plans for the economy. Join us as we examine what the recent Spring Budget means specifically for small businesses.
Further cuts to National Insurance
Following on from the 2p cut to National Insurance (NI) seen in the Autumn Statement 2023, the Chancellor has cut workers’ National Insurance by another 2p in the pound in the Spring Budget, which means it falls from 10% to 8%.
The Chancellor says the cut, which will begin in April 2024, is worth £450 a year to the average worker.
For those who are self-employed, Class 4 NI contributions on all earnings between £12,570 and £50,270 were already due to be cut from 9% to 8% in April 2024. It’s now been confirmed that the rate will drop to 6%.
Combined with the elimination of the requirement to pay Class 2 National Insurance Contributions, this will save the average self-employed person who earns £28,000 a year around £650.
Mr Hunt was also quick to point out that the combined effects of the reductions in National Insurance mean that the average person on the average wage now has the lowest effective personal tax rate since 1975.
VAT threshold for small businesses to increase
In another bid to appeal to small business owners, The Chancellor is also increasing the VAT threshold for small businesses from £85,000 to £90,000. The aim of this move is to help small businesses grow.
If your annual sales in the last 12 months are above the threshold, or they are likely to exceed the threshold in the next 30 days, then you must register for VAT. This is the first time that the limit has been raised since April 2017.
Additionally, the de-registration limit is also being increased from 1st April 2024 to £88,000. This means that if you currently charge VAT and your sales fall below this limit, you will be allowed to de-register.
Recovery Loan Scheme extended
The Recovery Loan Scheme was introduced by the government to help businesses affected by the COVID 19 pandemic. It enabled businesses to secure financial support from banks and lenders.
The scheme gave small businesses a 70% government guarantee on loans up to £2million in Great Britain, and £1million in Northern Ireland.
The scheme has been extended until the end of March 2026, and has now been renamed as the Growth Guarantee Scheme.
Relief for creative industries
As part of the Spring Budget 2024, the government is providing support across the whole UK screen industry to ensure it remains competitive internationally. The package will provide over £1billion in additional tax relief over the next five years.
Additionally, the government is introducing a new UK Independent Film Tax Credit at a rate of 53% for films with budgets under £15million that meet the conditions of a new British Film institute test.
How will the Spring Budget affect your business?
In theory, the Spring Budget 2024 set intentions to help grow small businesses, including cutting National Insurance, raising the threshold for VAT and providing extended financial support.
Whether it has delivered sufficient help across the board is a point of discussion.
If you would like advice about what the Budget 2024 means for your individual business, or for queries relating to company or self-employed taxation, please get in touch with us at Office Assistants.
