What the 2024 Spring Budget means for small businesses

On Wednesday 6 March 2024, Chancellor Jeremy Hunt made his highly anticipated Spring Budget speech.

Here we explore what the key measures in the budget mean for businesses around the UK and how the proposals laid out in the chancellor’s speech have been met by the small business community.

The context

The Chancellor is the government's chief financial minister, and the Spring Budget is their opportunity to set out plans for the UK economy.

Every year, the Chancellor of the Exchequer typically makes two speeches to the House of Commons to outline the government’s financial agenda: the Autumn Statement and the Spring Statement, sometimes called Autumn and Spring ‘Budgets’.

On the same day, the Office for Budget Responsibility (OBR) — the body that monitors public spending — publishes its assessment of the plans. As the independent public finances forecaster, this is their independent assessment of the expected impact of the policies announced in the statement.

The UK went into recession at the end of last year, after shrinking for six months. However, Andrew Bailey, the Governor of the Bank of England has hinted that the recession may be over already. Even if this is the case, households and businesses have been battling with rising prices for essentials for nearly two years.

Read on to find out how the Spring Budget might affect small businesses, the self-employed and landlords.

Skip ahead:

• National Insurance tax cut
• Value Added Tax threshold raised
• Alcohol duty freeze
• Fuel duty freeze
• Capital gains tax reduced
• Support for the arts
• Air passenger duty for business class travellers
• New powers for The Pension Regulator and the Financial Conduct Authority
• Stamp duty is back

National Insurance tax cut

Just two months ago, 27 million employees across the UK saw a change to their payslips thanks to a 2% cut in Class 1 National Insurance (NI) contributions. Now, we’re seeing another cut.

In April, Class 1 NI contributions are going to fall again from 10% to 8% (down from 12% in December).

Forecasts predict that from April 2024, employees paying Class 1 NI will save between £249 to £754 a year depending on their salary. Someone earning an average salary of £35,000 a year, would see a £450 saving.

The self-employed will also see cuts to their Class 4 NI contributions. In April, contributions were due to be cut by a percentage point to 8%, but this has now been lowered to 6%.

The threshold for when you will start paying income tax and NI contributions on your salary remains frozen, but this also means that people will pay more tax as their incomes rise.

Impacted: Class 1 employees and the self-employed paying Class 4

Value Added Tax threshold raised

Value Added Tax (VAT) is a tax added to most products and services sold by VAT-registered businesses — that is if its turnover is more than £85,000 a year.

Since 2017, the VAT threshold has remained frozen, but from April, the threshold for when small businesses must register as VAT-registered will increase to £90,000 in turnover.

Impacted: VAT-registered, and non-VAT-registered businesses

Alcohol duty freeze

Alcohol duty is a tax charged at the point of production or importation of alcoholic drinks exceeding 1.2% ABV. The freeze on this duty was due to end in August, however, it’s now been extended until February 2025.

The Chancellor said that this freeze should benefit 38,000 publicans as well as brewers, distillers and purveyors.

Impacted: Small businesses selling, importing or producing alcohol

Fuel duty freeze

Fuel duty is a tax paid by drivers when they top up their petrol or diesel at the pumps. This has been frozen since 2011 but was due to end later in March. The freeze has now been extended for another year at 53 pence a litre, saving the average car driver £50 in the next 12 months.

Impacted: Small businesses and the self-employed who drive

Capital gains tax reduced

You pay capital gains tax when you sell possessions worth more than £6,000 (excluding cars), stocks and shares, business assets or property that isn’t your main home. There is, however, an annual tax-free allowance.

When it comes to selling property, you pay a different rate of capital gains tax, depending on how much income tax you pay.

From 6 April, property capital gains tax for higher rate payers is to be reduced from 28% to 24%.

Impacted: Landlords selling properties they don’t call home

Support for the arts

Any filmmakers developing independent UK films with a budget of less than £15 million will be able to claim a new tax credit called the UK Independent Film Tax Credit (IFTC).

Eligible films will also be able to opt-in to claim an enhanced Audio-Visual Expenditure Credit (AVEC) at a rate of 53% on their qualifying spend.

Touring musicians and orchestral productions will also see the tax reliefs that were due to end in March 2025 made permanent.

Impacted: Filmmakers, touring musicians and orchestral productions

Air passenger duty for business class travellers

Air passenger duty is paid by passengers who start their journey in the UK. It’s a tax unique to the UK and covers both domestic and international flights.

If you travel domestically or internationally for work in business class, the duty you pay is going to rise as of 1 April. For domestic flights, the duty will be raised from £13 - £14.

For flights of 2,001 - 5,000 miles, the duty is increasing from £191 to £194. And for flights of more than 5,000 miles, the duty increases from £200 to £202.

Impacted: Air passengers that travel for business

New powers for The Pension Regulator and the Financial Conduct Authority

Chancellor Hunt also announced a new “value-for-money framework”. This will give The Pension Regulator and the Financial Conduct Authority powers to stop consistently poorly performing pension schemes from onboarding new clients.

In a boost for entrepreneurs — especially in tech — Chancellor Hunt mentioned the Government is looking at building upon the Mansion House and Edinburgh reforms to unlock more pension fund capital.

The Mansion House reform is an agreement between the major workplace pension schemes to increase investments in private equity.

The aim here is to encourage more UK-based entrepreneurs to remain in the UK, and list their companies on the London Stock Exchange.

Impacted: Startups and scaleups

Stamp duty is back

Stamp duty is a tax you often have to pay if you buy a home or piece of land over a certain price in England or Northern Ireland.

Buyers of more than one property in a single transaction completing on or after June 1, will have to pay stamp duty after the relief has been abolished.

According to Chancellor Hunt, the relief was “intended to support investment in the private rental sector, but an external evaluation found no strong evidence that it had done so, and that it was being regularly abused, so I am going to abolish it”.

Impacted: Landlords who may be purchasing more than one property in a single transaction

You may also like:

• Changes to employee rights in 2024
• Key business dates for 2024