Spring Budget 2024: Overview of announcements


Jeremy Hunt’s Spring Budget didn’t deliver a huge amount of technical content. Unsurprisingly, given an impending election, there was a lot of political bluster and not a great deal of substance, particularly for businesses.

The headline announcement  - which was widely publicised ahead of the Chancellor’s speech  - was the 2% cut to National Insurance Contributions (NICs) for employees and the self-employed, and so, coupled with the increase in thresholds for High Income Child Benefit Charges, it would be reasonable to call this a positive budget for employees and stimulating people back into work. The latest reduction to the main rate of employee National Insurance, from 6 April, follows on swiftly from the previous 2% reduction implemented in January this year. Those employees at the lower end of the pay scale will also benefit from around 10% uplift in National Minimum/Living Wage rates (announced in the Autumn Statement) from 1 April and these combined changes will make a considerable difference to the take-home pay of many employees from next month.

This is good news for individuals but it doesn’t help employers, as (again) there was no similar NIC giveaway for businesses. The 13.8% employer National Insurance charge on wages and taxable employee benefits remains unchanged and it seems therefore that the Chancellor’s long-term desire to completely remove this “penalty on work” is unlikely to extend to employer NICs, despite the widespread impact increases to NMW/NLW will bring for businesses. 

Meanwhile, cuts to NICs does little for fiscal drag, given that there has been no change to income tax thresholds, which are currently frozen until 2028.  

There was a lot of focus on growth, but in reality the support announced for businesses was minimal. While we didn’t expect anything for corporates, with full expensing and changes to R&D schemes announced in the Autumn, nothing was announced on business rates, which is fundamentally a huge cost to any business, and we had hoped for more support for family and owner-managed businesses. The 12-month freeze on alcohol duty will be welcomed by those in hospitality and also the extension of the fuel duty freeze for many businesses.

While the increase of £5,000 to the VAT threshold is welcomed it falls short of the hoped increase to £100,000 particularly given the seven-year freeze and recent inflation.

We are in a difficult position given the backdrop of how the UK economy has fared in recent years - and now in a recession – and as the Government is attempting to reduce UK debt the Chancellor’s options to provide fundamental tax reductions or support were limited -  but that doesn't help the businesses that are crying out for help.
The volume of actual documentation around the budget is much lower than we would normally see and that's very telling. There’s always going to be hope for more support but I think a lot of businesses will go away from this disappointed but not surprised.

Watch our Spring Budget Analysis Webinar to hear what experts from our tax, financial services and accounting teams thought about the changes announced and how they could impact you and your business.

Spring Budget Analysis Webinar

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