Spring Budget update: What it all means

Amid the swirl of economic challenges and the anticipation of a forthcoming general election, many awaited Chancellor Jeremy Hunt’s 6 March Spring Budget with bated breath.

With the dual aim of financial management and spurring voter interest, the Chancellor laid out a blueprint intended to catalyse long-term growth. In this blog, we delve into the key takeaways from the Chancellor’s address and explore how these could impact you and your business.

National Insurance Contributions (NICs)

One of the standout announcements was the further cut in NICs for both employees and self-employed individuals. From April, employees will enjoy a 2% reduction in the primary rate, dropping from 10% to 8%. This, on top of the cut introduced in January, represents a significant easing, saving the average employee earning £35,400 more than £900 annually.

For our self-employed friends, there’s also good news. The main rate of Class 4 NICs will see a reduction from 8% to 6%. Together with the previously announced abolition of the Class 2 NICs requirement, an average self-employed person earning £28,000 could save over £650 a year.

VAT registration threshold lifted

In a move to alleviate the administrative load on SMEs, the threshold for VAT registration is set to rise from £85,000 to £90,000 starting from 1 April 2024. This is great news for approximately 28,000 SMEs, potentially freeing many from the intricacies of VAT, fostering investment, and encouraging growth.

Furnished Holiday Lettings (FHL) relief

The Government has decided to phase out the FHL relief by April 2025. This measure aims to address housing shortages in prime tourist spots by discouraging short-term holiday lets in favour of long-term rentals.

Implications for the property market

The abolition of FHL relief is poised to rebalance the housing market towards long-term rentals, particularly in popular short-term rental areas. Meanwhile, the reduction in the higher rate of capital gains tax (CGT) on residential properties from 28% to 24% starting in April 2024 is expected to invigorate the property market.

Support for businesses

Though less pronounced than in the Autumn Statement, the Spring Budget still brings several supportive measures for SMEs, high-growth firms, and key sectors like manufacturing, the creative industries, and life sciences. This includes the Growth Guarantee Scheme, indicating a commitment to the business community.

Growth Guarantee Scheme

Building on the recovery loan scheme, the new Growth Guarantee Scheme is tailored to support SMEs in accessing crucial finance, marking a positive step forward for business growth.

Modernising the non-dom tax regime

The Chancellor proposed a refresh of the non-dom tax regime, exempting new UK residents from tax on foreign income for their first four years. This aims to raise £2.7 billion a year by 2028/29 while ensuring the UK remains an attractive place for international investment.

Savings and investments

The budget also introduced measures to boost savings and investments. A new UK ISA allows an extra £5,000 annual investment in UK equities, tax-free. Additionally, the launch of British Savings Bonds, offering a guaranteed rate for three years, is designed to offer savers more appealing returns.

The bottom line

Chancellor Jeremy Hunt’s Spring Budget has mapped out a Government strategy aimed squarely at tackling the present economic hurdles. By reducing the tax burden on individuals and businesses, revamping the non-dom regime, and encouraging savings and investments, the budget lays the groundwork for a more dynamic, equitable, and thriving economy.

Staying abreast of these changes and adjusting your financial strategies accordingly is crucial. At Total Accounting, we’re here with open arms, ready to assist you and your business through these changes. Whether it’s understanding how these adjustments affect your finances or planning your next steps, we’re just a conversation away.

Reach out and discuss how these updates impact you.

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