Spring Budget: what it means for you
The UK Chancellor Jeremy Hunt announced the Spring budget on 6 March 2024. Through key areas such as inflation, taxation, savings and public spending; the budget reinforces the Government’s intentions of securing long term growth for the UK and lowering inflation.
There were specific mentions of investments in healthcare, childcare and the prioritisation of public sector efficiency. In addition to this, there were mentions of investment in green industries alongside some tax reliefs that could help support businesses in the UK. Within these areas of the budget, BALI recognises that businesses can leverage these changes, which could help with being in a better position for future opportunities.
Thanks to the budget highlights from Accredited Supplier, Sones Accountancy Services, the Association is pleased to share further information on the budget, what it means to the Association and its members, and how we continue our engagement with the changes mentioned to drive meaningful change in the sector.
Supporting small and medium enterprises (SMEs)
VAT registration threshold, National Insurance cuts, Extension of the loan recovery scheme and pledge to extend full expensing to leased assets in the future were some of the main initiatives mentioned in the budget that could help businesses obtain financing that could help enhance growth plans.
National Insurance (NI) Cuts
From 6 April 2024, adding to the National Insurance cuts mentioned in the 2023 autumn statement, national insurance is set to be cut from:
- 10% to 8% for the main rate of employee national insurance
- 9% to 6% for the self-employed, combined with the scrapping of the requirement to pay class 2, will save an average self-employed person earning £28,000 around £650 a year.
Whilst this is welcome news from an employee perspective, BALI recognises that this announcement gives businesses little time to prepare. In future, we will work closely with other industry organisations to combine and share our concerns with the Government and seek assurances that they will keep adjustment periods for businesses in mind when rolling out changes.
In terms of preparation for the national insurance cuts, this would typically involve working with payroll/payroll software providers:
- To understand the impact of the change to your business
- To update software accordingly
- To give staff training/announcement notice
- To help with administrative changes
Payroll providers should be well equipped for this change, albeit all necessary changes have been made, and software has been updated. More guidance on the NI cuts can be found on gov.uk or by contacting the nics.correspondence@hmrc.gov.uk mailbox.
VAT Registration Threshold
The VAT Registration Threshold has been frozen for the last 7 years, but from 1 April 2024, the VAT registration threshold will be raised from £85,000 to £90,000. Previous thresholds resulted in businesses avoiding growth to prevent charging VAT on goods and services.
The Government estimates that over 28,000 businesses will benefit in 2024-25 from no longer being VAT registered. The Association welcomes this announcement, as the increase will help mitigate some of the compliance burdens of VAT registration. However, although the threshold has been changed, if it had risen with inflation then the threshold would be over £100,000.
Extension of full expensing to leased assets
The Government plans to extend the full expensing relief on qualifying plant and machinery investments to cover leased assets. This announcement, depending on the legislation to follow, could unlock up to £1bn of additional investment into commercial vehicles according to the British Vehicle Rental and Leasing Association. The Budget strictly states that full expensing will be extended to assets for leasing when fiscal conditions allow. The Association will update members accordingly when the legislation from the budget announcement is published.
Recovery Loan Scheme extended and renamed.
The Recovery Loan Scheme has been renamed the 'Growth Guarantee Scheme' and granted an extension til the end of 2026.
The renamed scheme will offer a 70% government guarantee on loans to small and medium enterprises of up to £2 million in Great Britain and £1 million in Northern Ireland. The Association recognises that this announcement could be a great opportunity for members to re-evaluate and strengthen their current lending positions, as estimates show that up to 11,000 SMEs could access the finance they need from the scheme.
Additional mentions
Alongside the above budget points, the Government also mentioned some changes to agriculture and the green economy, landfill tax rates and fuel duty. The Association sees these changes as an opportunity to work further with the Government and the sector to address issues and drive meaningful change.
Education and skills
The Government announced extensions allowing up to 200 extra apprenticeships per year in the British film industry. There were also changes for the advanced manufacturing sector where plans for a £50 million apprenticeship growth sector pilot was confirmed, which would deliver 13 apprenticeship standards in advanced manufacturing, green and life sciences sectors.
The Association is in the process of further dissecting what this apprenticeship growth sector pilot will mean. We will also work with other industry organisations to raise the profile for apprenticeships and workforce upskilling opportunities within the landscaping, environmental and horticultural sector.
Agriculture and the green economy
In 2024, the farming sector will benefit from the largest-ever round of grants on offer to support investment in agricultural productivity and innovation, with £427 million of government funding, bringing in additional private sector investment. The government is also providing £75 million to Internal Drainage Boards to bolster investment in water and flood management assets which play a vital part in protecting agricultural land from the impact of floods and storms.
The Association sees this as a welcome investment from the Government. We will be reaching out to others in the industry and working with them on how we can engage with the Government to understand what this investment will mean to our sector and how much of this investment we can expect to see within the landscape, environment and horticulture sector.
Landfill tax rates
The Government announced that landfill tax rates for the year 2025/2026 will see the following:
- Standard rate increased to £126.15 per tonne
- Lower rate increased to £4.05 per tonne
The Association recognises how increasing these rates could help drive the waste sector to uncover more sustainable alternatives within waste and recycling management. We call on members to share their perspectives on waste management and will endeavour to gather more understanding on how this will impact businesses. If you wish to get in touch, please do via contact@bali.org.uk
Fuel duty
The government is maintaining the rates of fuel duty at the current levels for another 12 months, extending the 5p cut and cancelling the plans to increase in line with inflation for 2024/2025. The government will maintain the difference between road fuel gas and diesel duty rates until 2032 following a review.
With the government keeping fuels within its consideration, this opens the door again for The Association to revisit the Government’s stance on rebated fuel in our sector.
Corporation Tax
The government will maintain the main corporation tax rate at 25% (for businesses with profits over £250,000) and the small profits rate at 19% (for businesses with profits under £50,000).
Conclusion
Whilst the Spring 2024 budget sets out a series of changes and measures that can help support small and medium enterprises, The Association still feels that longer-term support and the drive for meaningful change are limited.
There is a lot to take away from the Spring 2024 Budget, and there is even a chance that there could be more mentioned before the General Election is held. THE ASSOCIATION will provide regular updates on the progress that we make when engaging with the Government and other associations. We recognise that there have been some missed opportunities from the Government, and we will be working with members and other industry organisations to make sure our sector is represented and getting the recognition as a naturally green industry that it deserves.