Earlier this week Jeremy Hunt unveiled a series of tax and spending measures in his Spring Budget 2024 announcement. Now that we have had time to digest the measures set out in the budget, we have put together an article covering what it all means for your small business.
Our Article covers the following key points:
- Further cuts to National Insurance
- VAT registration threshold will be increased from £85,000 to £90,000 from 1st April 2024
- Recovery Loan Scheme will be extended and renamed the Growth Guarantee Scheme
- Furnished Holiday Lettings tax regime will be abolished from 6th April 2025
- Changes to CGT on property, fuel and air passenger duties, tax-free ISA allowances and more were also announced
- High Income Child Benefit Charge threshold increased
Further cuts to National Insurance
The Chancellor has announced further cuts to National Insurance (NI).
From 6th April, the main rate of Class 4 self-employed NI contributions reduces to 6%. This reflects an additional cut of 2% announced today on top of the 1% cut announced in the Autumn Statement. The Chancellor said the reduction would mean an average self-employed person on £28,000 a year would save £650 a year (when combined with the abolition of Class 2 NICs announced in the Autumn Statement).
The Class 1 employee’s NI contributions main rate will also be cut by 2% from 10% to 8% from 6th April.
In last November’s Autumn Statement the Chancellor abolished compulsory Class 2 self-employed NI from April this year.
VAT registration threshold rises
The VAT registration threshold will rise from £85,000 to £90,000 from 1st April 2024.
If annual VATable sales in the last 12 months are above the threshold – or they are set to pass that limit within the next 30 days – then business owners must register for VAT. This is the first time the threshold has been increased since April 2017. Your small business clients can find out more about registering for VAT on HMRC’s website or by reading our guide.
The VAT de-registration threshold is also being increased, to £88,000, from 1st April 2024. This means that if VATable sales fall below that level, your clients can de-register. This threshold is currently set at £83,000.
Recovery Loan Scheme extended and named Growth Guarantee Scheme
The Recovery Loan Scheme – a government initiative designed to help businesses affected by the Covid-19 pandemic to secure financial support from banks and other lenders – has been extended until the end of March 2026.
The scheme offers a 70% government guarantee on loans to SMEs of up to £2 million in Great Britain, and £1 million in Northern Ireland.
Furnished Holiday Lettings regime abolished
The Furnished Holiday Lets (FHL) regime, which offered certain tax advantages to people who let out property as a holiday home rather than as a long-term let, is to be abolished in April 2025.
This means that short-term and long-term lets will be treated the same for tax purposes.
You can find out more about furnished holiday lettings on the government website.
Higher rate of Capital Gains Tax on property reduced
The higher rate of Capital Gains Tax (CGT) on residential properties will be cut from 28% to 24% from 6th April 2024. The lower rate will remain at 18%.
High Income Child Benefit Charge threshold increased
Welcome news for parents: the threshold for High Income Child Benefit Charge will go up from £50,000 to £60,000 from 6th April 2024. The taper range – the level above which child benefit must be fully repaid – will increase from £60,000 to £80,000.
For more information on any of the above points about the Spring Budget 2024: What it means for Small Business clients please download a copy here
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