What the Spring Budget 2024 means for small businesses

National Insurance. It’s been suggested the government will eventually abolish National Insurance (NI) – watch this space. This month NI was cut from 10% to 8% for employees (Class 1) and from 8% to 6% if you’re self-employed (Class 4). These are in addition to the cuts that came in to effect in January which were announced last autumn. Overall, NI contributions have therefore reduced by a third. Make sure all your payroll figures are up to date. 

 

However, the government froze personal tax thresholds from 2021 to 2025. This means it is still likely to raise an additional £40billion from our personal taxes despite these cuts. 

 

High-Income Child Benefit Charge. The threshold for the charge on higher income families claiming Child Benefit also went up this month from £50,000 to £60,000. The upper range rises from £60,000 to £80,000. 

 

VAT registration. This month your VAT registration threshold goes up from a turnover of £85,000 to £90,000. It’s estimated this will affect around 28,000 businesses who would otherwise need to register for VAT soon. However, many businesses will still reach the new threshold quite quickly. If you’re approaching the threshold I’ll be happy to explain what’s involved. 

 

Full expensing. The government plans to extend the full expensing relief on plant and machinery investments announced last year to include leased assets. Currently, full expensing doesn’t cover cars and other items bought for leasing. Many small businesses lease equipment as a way to manage their cashflow, so this could make a significant difference. However, we don’t yet know when to expect the legislation needed for this measure. 

 

Higher Capital Gains Tax. The higher Capital Gains Tax (CGT) rate on property has gone down from 28% to 24%. This will help businesses and landlords planning to sell property or other assets to free up capital or reduce costs. 

 

Recovery Loan Scheme. The Recovery Loan Scheme is extended and renamed as the Growth Guarantee Scheme. It provides government-backed lending to UK businesses. The original scheme was due to end in June but will now run until March 2026. 

 

Furnished holiday lettings. Special tax arrangements for Furnished Holiday Lettings (FHL) end next April. This means there won’t be any difference between short- and long-term lets. 

 

HMRC debt management. An extra £140million is committed to improving HMRC’s assistance to manage tax debts for both individual and business taxpayers. 

 

Fuel duty. The temporary 5p cut to fuel duty has been extended for another 12 months. The cut was due to end on 23 March but will now continue until March 2025. 

 

Non-UK domiciled taxpayers (non-doms). Tax rules will change to become residence based. This means UK residents who stay here for more than four years will pay the same tax on their foreign income and gains, whatever their domicile status. 

 

The increase in the VAT threshold, NI cuts, the Growth Guarantee Scheme and extra full expensing relief are welcome. However, with increasing costs and rising interest rates small businesses are still under pressure. 

 

People are still paying more income tax as thresholds remain unchanged while pay increases to keep up with prices. Dividend allowances are now reduced to £500, which will affect many business owners who rely on dividends for part of their income. Employer’s NI contributions also remain unchanged at 13.8%. It might be time to rethink how to pay yourself if you’re a company owner.