The Spring Budget announcement by Chancellor Jeremy Hunt has brought a wave of changes aimed at fostering long-term growth for small and medium-sized enterprises (SMEs) in the UK.
We summarise the pivotal points from the announcement so you know how these changes may affect you.
National Insurance cut
A headline feature of the Budget was the reduction of employee National Insurance contributions (NICS) by an additional two percentage points, building on a previous cut.
This measure, effective from April 6 2024, lowers the rate to 8%, affecting payroll processes for employers and offering substantial savings for the self-employed, with Class 4 contributions decreasing from 9% to 6% on profits between £12,570 and £50,270.
Easing VAT burdens: A lift for small businesses
The Chancellor also announced an increase in the VAT registration threshold from £85,000 to £90,000, effective April 2024. These adjustments aim to alleviate the VAT-related administrative and financial pressures on small businesses, potentially exempting around 28,000 SMEs from VAT obligations altogether.
Consulting with an expert can help you maximise the benefits of these new measures, ensuring you are well-positioned to thrive in the constantly evolving business environment.
Capital allowances expansion
In a move to spur investment, full expensing of capital allowances has been made permanent, and notably, it will soon cover leased assets. This change allows businesses to deduct the total cost of qualifying investments from their taxable profits in the year they incur these expenses, promoting greater investment in vital business assets.
Fuel duty freeze extended
The Budget extended the freeze on fuel duty and maintained the 5p cut introduced in 2022 until March 2025. This measure is particularly beneficial for sole traders and SMEs reliant on transportation, averting potential increases in operational costs.
Boosting the hospitality sector
Recognising the challenges faced by the hospitality industry, the Chancellor has extended the freeze on alcohol duty until February 2025. This decision aims to support pubs and other hospitality businesses by enabling them to keep prices competitive.
Supporting business growth: Recovery loans and Growth Guarantee Fund
A £200 million allocation to the Recovery Loan Scheme, now rebranded as the Growth Guarantee Fund underscores the Government’s commitment to supporting SMEs in their growth and investment efforts. This initiative offers financial assistance to viable UK businesses with a turnover of £45m or less.
Tax regime changes
The Budget also spells the end for the Furnished Holiday Lettings tax regime, with its abolition set for April 2025. This move is expected to simplify tax considerations for businesses involved in the rental market while also addressing housing availability in communities.
Concluding thoughts
The 2024 Budget announcement presented a mix of tax cuts, investment incentives, and specific sector supports, aimed at bolstering the resilience and growth of SMEs across the UK. From significant reductions in NICs to the expansion of capital allowances and strategic sector support, these measures collectively offer a robust framework to help SMEs navigate the current economic landscape and plan for future growth.
It’s essential for small business owners and entrepreneurs to understand these changes and consider their implications for their businesses. At HW Associates, we take pride in helping SMEs adapt to changes as they come, leaving you to focus on growth and strategy.
Contact us to learn how we can help you adjust to these changes.