Key takeaways from the UK Spring Budget 2024, for your business.

UK Chancellor Jeremy Hunt presented the Spring Budget on the 6th of March 2024. This year’s budget underscores a commitment to reducing tax rates, encouraging investment, and fostering sustainable, long-term growth.

Opening remarks.
Jeremy Hunt says the UK economy has dealt with the financial crisis, the pandemic and energy crisis caused by war in Europe. He acknowledges that interest rates “remain high as we bring down inflation”, but adds: “We can now help families not just with cost of living support but with permanent cuts in taxation.” He calls it a “budget for long term growth”.
This was the last Budget speech to be delivered by the UK Government before the next general election, which is widely anticipated to take place later in 2024. To help you digest these changes, we’ve rounded up the key points worth noting:

How is the UK Economy doing?
Hunt says the economy is expected to grow by 0.8% this year and 1.9% in 2025. That is slightly stronger than the 0.7% and 1.4% growth rate expected by the Office for Budget Responsibility at the time of the autumn statement in November.
Growth is then forecast to be 2% in 2026 before dipping to 1.8% and 1.7% in 2027 and 2028.

Inflation is expected to fall below the government’s 2% target in “just a few months’ time”, Hunt says, down from 4% in January. “Nearly a whole year earlier than forecast in the autumn statement,” he adds.

The Bank of England’s long-term target is to keep inflation at a “low and stable” 2%.

The figure is down sharply from a peak of 11.1% in October 2022, as food and energy prices have eased.

Property tax
Hunt says the government will reduce the higher rate of property capital gains tax from 28% to 24%.
He also announces the abolition of stamp duty relief for those buying more than one dwelling.

Here’s a rundown of the key changes relevant to businesses.

Supporting Small and Medium-sized Enterprises (SMEs)
Acknowledging SMEs as vital contributors to the economy, the government plans to roll out several initiatives aimed at facilitating access to financing to fuel their expansion.

Raising the VAT Registration Threshold
Effective April 1, 2024, the VAT registration threshold will be increased from £85,000 to £90,000. This adjustment aims to provide businesses with more room to focus on growth before being required to enter the VAT system.

Extension of the Recovery Loan Scheme
Initially scheduled to conclude in June 2024, the Growth Guarantee Scheme (previously known as the Recovery Loan Scheme) will now run until March 2026. This extension offers SMEs in Great Britain access to loans up to £2 million, with Northern Ireland receiving up to £1 million, backed by a 70% government guarantee. These funds can be utilized for various business purposes, from addressing cash flow challenges to driving growth initiatives.

Promoting New Business
The government intends to reinstate the previous eligibility criteria for individuals to qualify as high net worth or sophisticated investors. A comprehensive review of the scope of exemptions will accompany this legislative move. This initiative is anticipated to garner positive responses from both new and expanding UK businesses, signaling the government’s commitment to nurturing investment in domestic ventures.

Guidance on Tax Deductibility
Sole traders and the self-employed can now refer to newly released guidance from His Majesty’s Revenue and Customs (HMRC) regarding the tax deductibility of training expenses. This guidance clarifies that costs incurred for updating skills, staying abreast of technological advancements, or adapting to industry changes are eligible expenses when calculating taxable profits.

Introduction of the Independent Film Tax Credit
The UK Spring Budget 2024 introduces the Independent Film Tax Credit (IFTC) set at a 53% rate for eligible film production expenses. Criteria set by the British Film Institute will determine eligibility for the IFTC. This provision applies to films commencing principal photography on or after April 1, 2024, covering costs incurred thereafter. Filmmakers can begin submitting claims from April 1, 2025.

To incentivize investment in new studio spaces and uphold the UK’s position in film and high-end TV production, the government will offer a 40% relief on gross business rates bills for qualifying film studios in England until 2034.

More support for AI
Efforts are underway to provide companies and researchers with access to leading public compute facilities, facilitating the creation of world-class AI products. Additionally, a new £7.4 million upskilling fund pilot aims to equip SMEs with the necessary AI skills for future opportunities. This initiative will be complemented by the SME Digital Adoption Taskforce, focused on enhancing productivity through digital technology adoption.

Green Industries
To expedite the expansion of the UK’s green industries, an additional £120 million will be allocated to the Green Industries Growth Accelerator (GIGA), aimed at nurturing low carbon manufacturing supply chains nationwide. Furthermore, approximately £390 million will bolster offshore wind and electricity networks, with an equal amount dedicated to supporting Carbon Capture Utilisation and Storage (CCUS) and hydrogen supply chains.

Advanced Manufacturing
The government is committed to positioning the UK as a global leader in manufacturing, with a £4.5 billion funding initiative earmarked for this purpose. Over £2 billion will be allocated to the automotive sector, £975 million to aerospace, accessible over a five-year period starting from 2025.
Furthermore, plans are in place to reinforce the UK’s position in advanced manufacturing, including the confirmation of the £50 million Apprenticeship Growth Sector pilot. This funding will support the delivery of 13 high-value apprenticeship standards across various sectors.

In Summary…
The Spring Budget 2024 introduces measures to support businesses in the UK through financial assistance and tax adjustments. These initiatives aim to empower businesses to leverage available support and position themselves for future opportunities. For in-depth detail and analysis, the full Spring Budget and supporting documents are available on the UK Government website.

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