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The Spring Budget 2024 Unpacked with BK Plus

In a landmark announcement from Westminster, Chancellor Jeremy Hunt presented the Spring Budget 2024 to Parliament earlier this afternoon, setting out the government’s financial strategy ahead of the forthcoming general election. This budget, announced during a period of cautious economic recovery and public anticipation, aims to address the UK’s immediate financial challenges while laying the groundwork for future prosperity.

With measures spanning from national insurance cuts to the introduction of incentives for savers and adjustments in business taxes, the budget targets a broad spectrum of economic areas. This approach reflects an effort to stimulate growth, support households, and encourage investment amidst ongoing global uncertainties.

Below, we provide a summary of the key announcements from the Spring Budget 2024, offering insights into their potential impact on the UK’s economic trajectory.

National Insurance Reduction

Starting from April, the rate of National Insurance Contributions will decrease from 10% to 8% of pay. This follows a previous reduction in the autumn statement of November, which saw the rate drop from 12% to 10%.

For individuals earning a full-time salary of £35,000, this latest 2p cut in national insurance is expected to translate into savings of approximately £450 a year.

Self-employed individuals, in particular, can anticipate an annual boost of around £350 due to the equivalent cut in their contributions. When combined with the reduction announced last autumn, the total annual tax saving for employees reaches £900.

VAT Registration Threshold Increase

The VAT registration threshold for small businesses and self-employed individuals will be increased from £85,000 to £90,000 starting April. This adjustment falls short of the £100,000 threshold some had anticipated. This change, the first in seven years, aims to reduce fiscal drag and encourage business activity. However, it’s noted that this £5,000 increase may not fully offset the impact of the previous freeze.

Capital Gains Tax and Housing

The higher rate of property capital gains tax will be reduced from 28% to 24%. Additionally, tax breaks for holiday let owners have been scrapped. The Chancellor suggests this change is expected to encourage more property transactions and increase revenues.

Business Tax Cuts Overview

The Chancellor expanded on the £10bn tax cut for businesses making capital investments in the UK, a move initially introduced in his autumn statement under the “full expensing” scheme. Responding to business community feedback, he has now extended this benefit to include tax relief for leased assets, broadening the scope for businesses to offset investments against tax. This includes investments in critical areas like factory machinery and IT equipment.

Additionally, the Chancellor announced a £200m boost to the post-pandemic Recovery Loan Scheme, aimed at lending to small businesses to fuel growth. For the creative sector, film studios in England will receive a 40% relief on their gross business rates until 2034, alongside a new tax credit for independent films with budgets under £15m, supporting innovation and growth within the industry.

Child Benefit Changes

Plans have been announced to offer additional support to parents regarding child benefit. A consultation will be launched on a new rule to base child benefit eligibility on collective household income instead of individual income, with a target implementation date of April 2026.

In the meantime, to provide immediate assistance, the child benefit threshold will be raised from £50,000 to £60,000. Furthermore, the upper limit of the taper, beyond which the benefit is gradually withdrawn, will increase to £80,000 from the existing £60,000.

Fuel Duty Remains Frozen

Fuel duty will be frozen for the 14th consecutive year, offering motorists a £5 billion tax break. This move extends the 5p reduction on petrol and diesel, initially due to end this month, for another year.

Introducing the ‘British ISA’

The launch of a new ‘British ISA’ has been announced, offering an additional £5,000 annual tax-free allowance for investments in UK equities. This initiative aims to connect British savers directly with the growth of the nation’s most promising businesses, encouraging investment in UK assets and supporting these companies in their expansion efforts.

What’s Next?

As we digest the implications of these changes, BK Plus is committed to providing businesses with the insights and guidance they need. We will be publishing an in-depth guide tomorrow, offering a detailed analysis of the budget’s impact on businesses.

Should you have any concerns or require further clarification on how these changes affect your business, please do not hesitate to get in touch with us. Our team is here to support you through these adjustments and help you make informed decisions for your business’s future.

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