Spring Budget 2024 – what’s in it for small businesses?

Here are the Chancellor's Spring Budget 2024 announcements that affect small businesses, including a rise in the VAT threshold and another NI cut for the self-employed

The Chancellor has set out the Spring Budget 2024.

Though there have been some positive moves for small businesses, experts say that the announcement was lacking overall.

“This was a budget for a general election, not for small business growth,” said Emma Jones, CBE, founder and CEO of Enterprise Nation. She cited late payments as an issue to that needed to be addressed for small business growth.

Richard Besant, director of Powdertech, said: “There were a few giveaways which were welcome, particularly around National Insurance, but more needs to be done to support UK businesses that are being hammered by inflation. A lot of what was on offer felt like too little, too late, geared towards the public voter than kick-starting UK plc.

“Another persistent pain point is energy costs, and it was unfortunate, yet unsurprising, that the industrial energy cap was not reduced. Perhaps this was a matter of convenience for a beleaguered government, keeping the UK business community paying inflated prices on long tariffs to support the domestic price cap.”

Following a period where small business borrowing has been notoriously difficult, James Robson, CEO of FundOnion, comments that SMEs have been ‘left out in the cold’: “Businesses need a Chancellor that supports long term economic growth, enterprise, and innovation, and is prepared to provide tax relief and incentives alongside greater access to alternative finance for quicker and easier funding. 

“The ‘small gestures’ that were tabled are not enough to make a difference in the short term, let alone the long term. This was certainly a wasted opportunity to keep businesses on side, especially at a time when their heads are being turned by Labour in the run up to the election.” 

The return of VAT-free shopping for tourists and an Apprenticeship Levy reform were not mentioned, despite widespread calls.

As expected, nothing was mentioned in terms of business rates either. Jamie Roberts, partner at YFM Equity Partners at YFM Partners comments: “We are still waiting for meaningful reform on business rates, which continue to create barriers for businesses and hold back growth. Not only are the current level of business rates placing a burden on individual businesses, but the lack of clarity is making longer-term cost and taxation planning for many businesses extremely challenging.” 

How the Spring Budget 2024 affects small businesses

Rise in VAT registration threshold

Hunt announced that the threshold at which businesses will have to register for VAT has increased from £85,000 to £90,000. Though it’s a step in the right direction, it may not be enough to keep up with inflationary pressures. Faye Church, senior chartered financial planner at Investec Wealth & Investment (UK) said: “Any increase is a good increase, however, if the threshold had risen with inflation from 2018 it would be £108,048 today and £112,000 by 2025/26.”

We might still see some small businesses trying to stay below the threshold in order to avoid VAT. Owen Burn, VAT director at Evelyn Partners, explains further: “We need to err on the side of caution in that some businesses may opt to manage turnover to remain under the threshold to avoid a potential 20 per cent rise in prices and the additional administrative and financial burden of filing Making Tax Digital compliant VAT returns. It is therefore unclear what level of growth this marginal rise will deliver for small businesses as a whole at or around the threshold. “

Related: What is the VAT threshold?

Further National Insurance cut for the self-employed

The main rate of National Insurance Contributions will be cut for the self-employed, going from 8 per cent to 6 per cent. The Treasury says that’s an extra £350 a year for a self-employed person.

Extension of Recovery Loan Scheme

The Recovery Loan Scheme will be extended for two years, under the Growth Guarantee Scheme moniker. The Treasury said that the scheme was helping 11,000 businesses get funding.

Alcohol and fuel duty frozen

After some concern that the duty on both of these items was going to increase, thankfully a freeze has been confirmed. Alcohol Duty will be frozen until February 2025 and the 5p fuel cut will stay in place for another 12 months.

Full expensing

Full expensing, providing 100 per cent corporation tax relief for capital expenditure has been extended to cover plant and machinery, to leased assets.

Martin Dye, director at professional services firm Evelyn Partners comments: “This will be particularly good news for a number of businesses that have internal plant hire companies, who were previously excluded from claiming the super deduction and full expensing.”

Related: Hunt replaces super deduction with new tax break – Among his announcements in the Spring Budget, the Chancellor has introduced full expensing, successor to the super deduction tax break

More investment in green industries and manufacturing

Up to £120m more to the Green Industries Growth Accelerator to build supply chains for new technology ranging from offshore wind to carbon capture and storage.

Hunt announced a further £270m of investment into new automotive and aerospace research and development (R&D) projects, building the UK’s capabilities in zero emission vehicle and clean aviation technology.

Abolition of Furnished Holiday Lettings regime

The Furnished Holiday Lettings scheme is to be scrapped in order to benefit local economies. Under the rules, those who have properties that qualify as FHLs qualify for tax breaks.

Kate Allen, owner of Finest Stays, said. “Pulling the Furnished Holiday Lettings regime out of the hat like a despondent bunny rabbit won’t raise anything like the sums intended, and will damage the tourism economy across our coastal communities.

“Deterring second home owners from renting out their properties will leave properties unoccupied as owners won’t see the yield worth the effort of renting out.”

British ISA

With the British ISA, people can invest up to £5,000 a year tax-free in UK assets.

Paul Stevens, head of quotes at BGF (formerly British Growth Fund), said: “A British ISA is a positive development in addressing the urgent need to drive investment into UK-listed companies and support the growth of our economy. It is important that the beneficiaries are not just the blue-riband names from the FTSE100. Smaller listed companies have been suffering from a lack of access to capital and BRISA is a welcome step to redressing this and to stimulate greater investment.”

£1bn in additional tax relief for the creative industries

An additional £1bn in tax relief has been announced for the creative industries.

Caroline Norbury OBE, Chief Executive of Creative UK, said: “We’re delighted to see support for independent film announced, in the shape of a new UK Independent Film Tax Credit for films with budgets up to £15m.

“Scrapping the 80 per cent VFX (visual effects) cap will make a real difference when it comes to incentivising UK production, and the increase in the rate of tax credit by 5 per cent is a positive step forward.

“We’re also pleased to see the tax relief for Orchestras, Theatre, Museums and Galleries made permanent. Non-touring theatre productions and museum/gallery exhibitions will benefit from a permanent relief rate of 40 per cent. In addition to this, touring theatre productions and exhibitions, and all orchestra productions will also now benefit from a permanent relief rate of 45 per cent.”

The Spring Budget 2024 live blog

13:36: Further self-employed National Insurance cut from 8 per cent to 6 per cent from April 6, 2024.

13:24: Will abolish Furnished Holiday Lettings regime.

13:23: Vape tax from October 2026 and increase on Air Passenger Duty on non-economy flights to be introduced.

13:08: Childcare providers to be paid guaranteed rate.

13:04: £1bn in additional tax relief for creative industries over the next five years.

12:53: VAT threshold increased to £90,000 from £85,000.

12:52: Recovery Loans scheme being extended under Growth Guarantee Scheme.

12:50: Full expensing to apply to leased assets.

12:43: Frozen fuel duty and maintaining 5p cut for another 12 months.

12:41: Alcohol duty frozen until February 2025.

12:37: Hunt promises more investment and more jobs. OBR forecast show inflation falling below 2 per cent before end of 2024.

Read more

What is the VAT threshold? – At what point does your small business have to start paying VAT? Should you voluntarily pay VAT? And what are legitimate ways to stay under the VAT threshold?

7 ways to reduce your corporation tax bill – All limited companies must pay corporation tax on the profits they make, but there are entirely legitimate ways to reduce the amount you pay says James Johnson, a partner at Hillier Hopkins

7 electricity suppliers for small businesses – We provide information on seven electricity suppliers, looking at their green credentials, affordability and customer service

Avatar photo

Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

Related Topics

The Budget