Spring Budget Overview

Chancellor Jeremy Hunt announced the government’s spending plans for the upcoming year in his Spring Budget last Wednesday. From a fuel duty extension to a cut to National Insurance contributions, here’s an update on the key areas that could your affect your business in this continuously challenging economic

National Insurance contributions

National Insurance contributions have been cut for the self-employed from 9 per cent to 6 per cent.
This 2p cut comes after a 1p cut was announced during the Autumn Statement. According to the chancellor, cutting National Insurance could save the self-employed an average of £650 a year when combined with the need to no longer pay Class 2 contributions.

Increasing the VAT registration threshold

Another change announced in this year’s Budget is an increase to the VAT threshold, which had previously remained the same since April 2017. The VAT threshold has now been raised to £90,000 from £85,000.
Historically, there are many smaller businesses which attempt to keep their business turnover below this threshold in order to avoid registering for VAT –potentially missing out on new business growth opportunities.
By raising the VAT threshold, small businesses can have more opportunities to grow without the need to pay VAT.

Fuel duty freeze extended again

As inflation remains high and the country continues to struggle with the cost of living crisis, the government has decided to keep fuel duty frozen once more (for the 14th year in a row).
The current rate will be maintained for an additional 12 months, extending the existing 5p cut and cancelling the planned inflation increase. This extension could save the average car driver £50 a year.

Extending the alcohol duty freeze

Hospitality businesses will take note that the chancellor has extended the freeze on alcohol duty – from 1 August 2024 until 1 February 2025. Beginning from 1 August 2023, the alcohol duty system was simplified, with all alcoholic drinks being taxed based on their alcohol by volume (ABV) by litre of
alcohol. This latest extension will result in 2p less duty on the average price of a pint of beer, which the chancellor says should benefit 38,000 pubs across the UK.

Child benefits threshold increased

The child benefits threshold has seen an increase, which comes after the chancellor addressed the “unfairness” of the previous system. The High Income Child Benefit Charge threshold has now been raised from £50,000 to £60,000. In January, the chancellor admitted “unfairness in what happens with
dual-income families on £50,000 each compared to a single earner on £100,000″.
But with the new threshold, this has been raised to £60,000 – with the taper raised from £60,000 to £80,000. The chancellor also announced plans to base the system on total household income, rather than on individual parental income. However, this change isn’t set to come into effect until 2026.

Lower inflation

The chancellor also brought up an anticipated drop in inflation. The Budget revealed that the Office for Budget and Responsibility (OBR)’s latest forecast shows that inflation is set to drop below two per cent in the next few months.

And finally, of especial interest to our local economy; –

Eligible film studios in England will receive a 40% reduction on gross business rates bills until 2034.  The relief will be implemented as soon as possible, backdated to 1 April 2024.  Studios will remain eligible for
Improvement Relief.