The upcoming Spring Budget on 6 March 2024, a pivotal fiscal event, holds significant implications for UK business owners. As the date approaches, business owners will be closely monitoring Chancellor Jeremy Hunt’s announcements, keenly aware of the potential impact on their financial landscape.
The Office of Budget Responsibility, at the Chancellor’s request, is preparing an economic and fiscal forecast to be presented alongside the Budget in the UK Parliament. The focus will be on public finances, borrowing projections, and potential shifts in public services.
Let’s delve into the key predictions for the Spring Budget 2024, specifically tailored to the interests of UK business owners, encompassing spending plans and tax considerations.
Expectations for UK Business Owners
1. Income Tax Thresholds:
There’s a possibility of an increase in income tax bands, offering relief to UK taxpayers. The stagnant personal allowance and basic rate band since 2021/22 could see adjustments, providing a welcome respite from ‘fiscal drag.’ Any earlier application of inflationary increases before the frozen period until April 2028 would be beneficial.
(Note: Different bands apply to non-savings income in Scotland.)
2. Income Tax Rates:
Following the reduction in National Insurance Contributions announced in the Autumn Statement, a parallel decrease in income tax rates might be on the horizon. The Conservative government’s commitment to easing the tax burden aligns with the public’s desire for income tax cuts. A 1-2% reduction in the basic rate of income tax is conceivable.
3. Making Tax Digital for Income Tax:
While progress was made in the Autumn Statement, the accounting profession suggests that more needs to be done to adapt reporting rules before the April 2026 start date.
4. VAT Threshold for Economic Growth:
Raising the VAT registration threshold, which has remained at £85,000 since 1 April 2017, is viewed as a potential catalyst for economic growth. Addressing this threshold may remove barriers to business expansion.
5. Pensions:
Expectations include further discussions on pension reform to ensure better outcomes for savers. The proposed lifetime provider model aims to prevent the accumulation of small pension pots as individuals progress through multiple employers.
6. Simplification of Capital Allowances
Measures introduced in the Autumn Statement 2023 may be extended, focusing on simplifying the UK’s capital allowances legislation. This includes full expensing for companies and broader application of cash accounting for self-employed individuals.
7. Fuel Duty
The temporary 5p cut in fuel duty, set to end on 23 March 2024, may be addressed in the Budget. Potential extensions or measures to counter inflationary increases in duty could be in the spotlight.
Implementation Timeline
One key question looms: When will these tax savings take effect? While the Spring Budget may unveil a package of measures, a ‘5-year tax-cutting plan’ is reportedly in the works. This implies a phased implementation over several years, contingent on potential changes in government. As we anticipate these fiscal developments, the shadow financial secretary from the Labour Party will undoubtedly be closely watched for their perspective on these matters.
For further advice on how anticipated announcements in the Spring budget could affect your business, contact Voscap today at 020 7769 6831 or email help@voscap.co.uk to speak to one of our business recovery specialists.
