Sones discusses Spring Budget 2024 highlights

On 6 March 2024, Jeremy Hunt, Chancellor of the Exchequer, presented his 2024 Spring Budget to Parliament. The Chancellor stated that the UK economy is set to grow by 0.8% in 2024 and 1.9% in 2025.  His speech unveiled the introduction of fresh taxes and modifications to current taxes, alongside alterations to several economic policies. So, what are the revelations and how do they impact business owners? 

Let’s delve into some of the announcements:

National Insurance

There was a 2% cut in the main rate of employee National Insurance Contributions (NICs) from 10% to 8%.  This follows the 2% cut announced in the Autumn Statement which took effect from 6 January 2024.  This means a tax cut of over £900 for the average worker earning £35,400 compared with last year.

For the self-employed, there will be a further 2% cut to the main rate of NICs from 6 April 2024, reducing the rate of Class 4 NICs to 6%. In addition, the government confirmed that it will consult later in the year on abolishing Class 2 NICs.  This should save the average self-employed person earning £28,000 over £650.

The salary thresholds at which people start paying income tax and national insurance remain frozen, meaning people will pay more tax as their incomes rise.

VAT

The threshold at which small businesses need to pay Value Added Tax (VAT) will increase from £85,000 to £90,000. This is to incentivise smaller business productivity.  Whilst the £5,000 increment impacts numerous business owners, it falls short of a true uplift.  Had the threshold kept pace with inflation since its last adjustment in 2017, it would have risen to £108,000. 

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).

Fuel Duty

The 5p cut to fuel duty will be maintained and rates frozen for another year.

If you would like to talk with Accredited Supplier, Sones Accountancy, about how these changes affect you, arrange a consultation here:  https://calendly.com/sonesaccountancy/15min