If you’re running a small business or thinking of starting one, you’ve probably been keeping an eye on the latest Spring Budget announcement.
With the UK grappling with a recent technical recession and an election looming, Chancellor Jeremy Hunt had a tightrope to walk – balancing fiscal responsibility with much-needed support for businesses and individuals. But guess what? It looks like he’s pulled it off, unveiling a Budget that’s all about fostering long-term growth.
Let’s dive in and see what this means for you and your business!
A quick overview
Dubbed a ‘Budget for long-term growth’, Hunt’s speech included a mix of tax breaks, investment boosts, and reforms aimed at creating a fairer tax system. The headline grabber was a significant 2p cut to National Insurance contributions (NICs) coming this April, in addition to the NIC reductions already announced in the 2023 Autumn Statement.
But that’s just the tip of the iceberg. With measures aimed at easing fuel duty, reforming capital gains tax (CGT), and making the High-Income Child Benefit Charge fairer, there’s plenty to unpack. And for businesses, there’s enhanced funding for high-growth industries and a welcome bump to the VAT registration threshold.
The economic landscape
First things first, let’s talk about the economy. Despite the technical recession at the end of 2023, the Office for Budget Responsibility (OBR) has some surprisingly upbeat news. The economy is doing better than expected, with inflation on the decline and a brighter outlook for real household incomes. The OBR forecasts GDP growth to gradually pick up, with living standards expected to bounce back to pre-pandemic levels by 2025. That’s sooner than expected and a big win for everyone.
Spring Budget: What’s in it for you?
So, how does all this affect you and your business? Let’s break it down:
- National Insurance cut: The latest changes mean that NIC rates are dropping by 4 percentage points in less than six months. For employees, that means more money in your pocket each payday. And if you’re a self-employed sole trader or in a business partnership, you’ll see a reduction too, thanks to cuts in Class 4 NICs.
- VAT threshold increase: This is huge for small businesses. The threshold is jumping from £85,000 to £90,000 in April, easing the VAT burden and potentially cutting down on admin for thousands of business owners. That means more time to focus on growing your business and less on paperwork.
- Support for high-growth industries: If you’re in a creative or high-growth sector, the Budget has some goodies for you. Enhanced funding and focused support could be the boost you need to take your business to the next level.
- Fuel duty freeze: With fuel duty frozen and a 5p cut extended for another 12 months, businesses relying on transportation (and commuters) get a bit of relief amidst fluctuating fuel prices.
- Alcohol duty: As proud accountants for pub owners, we were happy to see the freeze on alcohol duty maintained until February 2025. Alcohol duty rates typically rise in line with inflation, but Hunt’s decision to keep them on ice will benefit 38,000 pubs across the UK.
The small print
Of course, it’s not all tax cuts and spending sprees. The Chancellor has also introduced measures to balance the books, like a new levy on vaping products and changes to tax rules for non-doms. And let’s not forget the abolition of the furnished holiday lettings relief, which is set to put a higher tax burden on those with short-term holiday lets. Changes are afoot, but the Government says it’s all in the name of fairness and long-term growth.
Looking ahead
As we navigate these changes, it’s clear the Government is putting its money where its mouth is – investing in growth, supporting small businesses, and easing the tax burden for individuals. With the economic outlook brighter than anticipated and a raft of supportive measures, it feels like we’ve got this.
The bottom line? This Spring Budget could be a game-changer for your small business. Whether it’s benefiting from the NIC cuts, leveraging the increased VAT threshold, or tapping into targeted support for your industry, there’s plenty to be optimistic about.
Remember, while the road ahead may still have its bumps, the Budget’s focus on growth, investment, and fairness is a solid foundation for success. So, let’s roll up our sleeves and make the most of it. Here’s to a thriving, vibrant small business community!
And remember, if you ever feel overwhelmed or unsure about how these changes affect you, we’re here to help. With Blue Shore’s finger on the pulse and our expertise in all things accounting, you can count on us to guide you.
We’re just a message (or phone call) away. Get in touch or book a session online for expert accounting advice.
