I feel like we say “mixed bag” a lot. But the spring budget announced on Wednesday was definitely a mixed bag. It would have been great to have seen a reform on business rates but spoiler alert, we didn’t. It feels like some token bones thrown to SMEs but fundamentally, nothing that is going to set the fire back under the UKs economic backbone.
Let’s take a look at the headlines and what they might mean for you as an employer and as a business.
Employee National Insurance contributions drop another 2%, totaling a 4% cut since last year. This brings employee National Insurance contributions down to 8% in total.
For Employers: Time to tweak payroll before 6 April to accommodate this cut. Should be fairly simple to make the change for PAYE employees. You will save money on your payroll with this cut but if you’re firmly into the smaller business category, it’s unlikely to be anything too groundbreaking I am afraid.
For Your Business: Self-employed folks, your Class 4 contributions dip from 9% to 6% on certain profits, starting 6 April. Keep an eye on your pennies; they’re about to stretch a bit further. Apparently you will £650 on average but let’s see shall we.
The threshold for VAT registration jumps to £90,000 in April 2024, up from the current £85,000.
For Employers: Slightly indirect impact on you as an employer. Ultimately it’s less VAT hassle for 28,000 small businesses apparently who will be lifted out of VAT all together. The financial health increase of some of these businesses could translate to better growth and employment opportunities.
For Your Business: A potential VAT-free life for a bit longer, improving cash flow and reducing paperwork nightmares. It seems like a nudge in the right direction over a big step but with the businesses out there where the margins are tight, this could help.
Full expensing extends to leased assets, making it a permanent fixture. There’s some more legislation coming on this in the next few weeks so do keep an eye. Definitely one to speak to your accountant over (we will be!). At the moment, full expensing only applies to assets which are purchased.
For Employers: Reassess your asset strategy; it’s time to make those investments count. Leasing is often a go-to option for smaller businesses or startups where they may not have accrued the starting capital for full purchase. Staff equipment, laptops etc could all fall within this.
For Your Business: A clearer path to reducing taxable income through investments, potentially a big save on the horizon. It won’t include cars but office equipment, vans and even a kitchen could all end up on the list.
£200 million pledged to support small business growth through a solid rebrand of the recovery loans scheme to the ‘Growth Guarantee Fund’. The Growth Guarantee Scheme is set to continue through March 2026, providing SMEs in Great Britain with up to £2 million in loans and those in Northern Ireland with up to £1 million, both backed by a 70% government guarantee.
For Employers: A chance to access funds crucial for expansion or recovery. There are few stipulations on what the fund can be used for and as far as we can see, hiring and expanding your teams is legitimate use of the funds.
For Your Business: A door opens to financial support that could fuel your next big leap.
Have a good read here.
The HICBC threshold is being raised from £50,000 to £60,000 starting April 2024, and the charge rate is being halved. This means Child Benefit won’t be completely withdrawn until an individual earns £80,000 or more, instead of the current £60,000 cutoff. This adjustment impacts the recovery of Child Benefit through the tax system for families where the highest earner’s income exceeds £50,000, fully withdrawing the benefit at incomes of £60,000 until now.
For Employers: Might need to rethink your employee benefits as this change is significant. If you’re running a startup or SME, this adjustment could influence your compensation strategies, particularly for key talent earning within these new thresholds. It’s an opportunity to review your benefits package and possibly integrate more flexible, tax-efficient options that align with these changes. This could be an excellent time to discuss how these changes impact your employees’ take-home pay and overall satisfaction, potentially improving retention and attracting top talent. Startups in particular often make use of a part-time/flexible workforce and these changes should give you more flexibility in who is out there.
For Your Business: For those who draw income from their business, understanding the implications of these changes on your overall tax liability could inform decisions around salary, dividends, and investment in growth. This is particularly relevant for startup founders and SME owners who might be navigating the fine line between reinvesting in their business and managing personal finances under the evolving tax regulations. As ever, talk to your accountant.
Fuel duty remains unchanged until March 2025, keeping the 5p cut intact.
For Employers: Every penny saved on fuel is a penny that can be reinvested into your business. The Chancellor claims this measure will save the average car driver £50 over the course of the year so if you’re trying to get people back into the office then hey, maybe this will be good for your people.
For Your Business: Sole traders rejoice; your on-the-road costs just got a bit more manageable. Well, nothing has really changed but the current rate was due to end this month so they will at least stay manageable.
Alcohol duty freeze extended until February 2025, keeping prices stable. Struggling to think of anything super positive to say on this one. Hospitality has been getting hammered on all sides for a while and it shows in the numbers. A continuation of duty freeze, at least to me, comes across as the bare minimum for what could be done.
For Employers: A breather for pubs and restaurants facing financial pressures which might translate into more confidence on job security.
For Your Business: An opportunity to maintain, or even possibly reduce, your prices, attracting more customers.
That’s all folks! If you want to read the full list of changes, head on over to the government website for a read.
