What does the Spring Budget mean for SME’s?
Amidst the UK’s entry into a technical recession towards the end of 2023 and with a looming general election on the horizon, Chancellor Jeremy Hunt faced mounting pressure to unveil a Spring Budget that showcased both fiscal prudence and generosity.
Branding the fiscal statement as a ‘Budget for long-term growth,’ Hunt centred his address on implementing tax incentives, enhancing investment, and addressing inequities within the UK tax framework. What will this mean to your business?
As is customary, a new Budget announcement from the Chancellor of the Exchequer can elicit varied reactions. For some, it brings favourable outcomes with the introduction of fresh allowances and initiatives, while others may feel overlooked amidst the fiscal rearrangements.
In the Spring Budget, alongside a substantial £10 Billion National Insurance reduction effective from April, support for businesses through the continuation of the Recovery Loan Scheme was emphasised. Now rebranded as the “Growth Guarantee Scheme”, running from July 1st, 2024, to March 31st, 2026, it promises a 70% loan guarantee on amounts up to £2 Million. This initiative aims to benefit approximately 11,000 companies across the UK, particularly those situated outside London.
A significant alteration introduced in this year’s Budget is the extension of the “full expensing” tax break. Previously limited to certain qualifying expenses without minimum or maximum thresholds, this provision didn’t extend to leased assets. However, there has been a notable shift in this regard, with leased vans, trucks, and plant and equipment now eligible for the tax break. This adjustment is anticipated to provide a boost to companies predominantly reliant on leased equipment rather than outright purchases.
Previously, leased vehicles were exempt and, although cars still look unlikely to be included, this is a positive step forward. Draft legislation is currently being developed to formally incorporate the full expensing of leased equipment into the legal framework.
With the freeze on the basic rate band of income taxable at £37,700 until April 2028 and no changes to Corporation Tax, the increase in the VAT registration threshold from £85K to £90K aims to foster business expansion.
Additionally, the decision to maintain the freeze on fuel duty and Benefit in Kind rates for company vehicles until 2027/2028 has provided reassurance to company vehicle owners and car drivers. Underlined as the “Budget for Long Term Growth”, it is hoped that these measures will contribute to delivering on this objective.
