2024 spring budget

2024 Spring Budget

Today’s Spring Budget delivered by Chancellor Jeremy Hunt was short on surprises and short on any specific measures which would help the SME sector. Overall, it seemed to be more about preparing the ground for the next General Election which is expected later on this year.

From the IAB’s point of view, what was more important were the measures that were NOT announced including tackling the skills gap, Apprenticeship Levy reform, a cut in Corporation Tax or energy bills support for SMEs.

The Chancellor started off by stating that according to the Office for Budget Responsibility (OBR), the UK economy was predicted to grow by 0.8% this year, then 1.9% next year. He also reflected on the fact that inflation had fallen from a high of 11% to just 4% now.

Much trailed beforehand, the key announcement was the 2p reduction in National Insurance. This represents a reduction in Class 4 NICs from 8% to 6% for the self-employed.

There were three further updates referencing the tax regime. First off were measures to tackle the tax gap which the Government estimates will bring in an additional £4.5 billion a year by 2028/29.

At the same time, the current ‘non-dom’ regime will be replaced by a simpler system where arrivals have access to a more generous scheme for their first four years of tax residency before paying tax in the same way as everyone else.

Finally, Jeremy Hunt announced that he would be increasing the VAT threshold from £85,000 to £90,000. The Government estimates this will take 28,000 small businesses out of VAT registration.

Other items worth mentioning included a further freeze in fuel duty until March 2025, the launch of a new British ISA designed to help retail investment plus a range of new tax breaks and investments to help to establish the UK as a world-leader in high-growth industries.

New CEO of the IAB, Sarah Palmer writes: “This was a pretty lacklustre Budget in terms of what was on offer for small and medium sized businesses. For us, one of the most vital issues facing the UK economy is a lack of skills in the workforce – something we are passionate about changing. So, to see almost no mention of this in the Budget was very disappointing and we hope that whoever is elected later on this year, will make this a priority commitment.

“In addition, at a time when business support is being transferred from LEPs and Growth Hubs to incredibly cash-strapped local authorities, we would have liked to have seen some form of spending commitment around helping SMEs to thrive in what is a fast-changing world.”