2024 Spring Budget Special 💷
💼 All the relevant Spring Budget announcements for SMEs, including energy, fuel duty, National Insurance contributions, business rates, income tax, VAT, and more.
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💼 2024 Spring Budget for SMEs
Bionic rounds up the most relevant bits of the 2024 Spring Budget so you know exactly what to expect.
We’re just reporting the facts, we’ll leave it up to you to decide whether the Chancellor’s plans go far enough. You can read more on the announcements at our blog - Spring Statement round-up for busy business owners.
💡 Energy
Energy prices have been coming down since they peaked in August 2022, when gas wholesale prices were 593p per therm (around 29 kWh) and electricity wholesale prices were £522 per MWh (1,000 kWh).
To put that in perspective, gas wholesale prices are now 76p per therm, while electricity wholesale prices are £69 per MWh.
And so the government will, as planned, call an end to the Energy Bills Discount Scheme on March 31. There will be no further support for non-domestic energy bills after this time.
And remember, there’s no price cap on non-domestic energy. The latest price cap will kick in on April 1, but it won’t affect your business energy bills.
Comparing quotes and fixing your rates is the only way to secure bill certainty and avoid any future price volatility.
🤒 National Insurance Contributions
As per the 2023 Autumn Statement, the main employee National Insurance rate was cut from 12% to 10% on January 6, 2024. A further 2p reduction will cut this from 10% to 8% as of April 6, 2024.
As an employer, you will still pay NICs at a rate of 13.80% for all employees who earn more than £8,840 per year (excluding those aged 21 or under and apprentices aged 25 or under).
The Employment Allowance will stay at £5,000 until March 2026. This means eligible employers can cut their employer NICs bills by up to £5,000 per year, a tax cut worth up to £1,000 per employer.
If you’re self-employed, National Insurance Contributions will be cut from 8% to 6%. and there are changes to both "Class 2" and "Class 4" rates. All of which will kick in from April 6, 2024:
"Class 2" National Insurance paid by self-employed people earning more than £12,570 will be scrapped. That will get rid of a flat rate compulsory charge of £3.45 a week.
"Class 4" National Insurance will be cut from 9% to 8%. This is payable on profits between £12,570 and £50,270. It will stay at 2.73% on profits over £50,270.
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📈 VAT
The VAT registration threshold will increase from £85,000 to £90,000 from April 1, 2024. This means your business doesn’t need to pay VAT on its first £90,000 of taxable turnover.
🏪 Business rates
Business rates are taxes on property used for business purposes, such as offices, shops, pubs, and warehouses. You can check out the government website for more information on business rates.
Business rates are calculated by using a multiplier. The rateable value of your business property is multiplied by this number to give you your final bill. If the rateable value of your property is below £51,000, your bill will be calculated using the small business multiplier. This will continue throughout 2024/25.
The Retail, Hospitality and Leisure business rates relief scheme will be extended for another year. This gives eligible properties a 75% relief on business rates, up to a cash limit of £110,000 per business.
The Chancellor estimates that this will save the average independent shop more than £20,000, and the average independent pub more than £12,800 over the next year.
Go to the government's website to work your business rates.
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💷 Dividend tax
If you’re a company shareholder, dividends are the money you get from company profits. Unlike with salary payments, your company must be making a profit after tax before it can pay dividends. Dividend tax is the tax you need to pay on these dividends.
Your income tax band dictates the rate of tax you pay on dividends above the allowance. From April 6, 2024, this allowance will be £500 and the following rates will apply:
Ordinary rate – 8.75%
Upper rate – 33.75%
Additional rate – 39.35%
🏦 Capital gains tax
If you sell shares at a profit, you’ll be charged capital gains tax on the money you make. If you’re a higher-rate taxpayer, you’ll pay a 20% capital gains tax on profits from shares. The tax-free threshold will be cut to £3,000 from April 6, 2024.
The Chancellor announced the higher rate of capital gains tax on residential property will be cut from 28% to 24%.
💷 Wages
The national living wage - the minimum amount that can be paid to workers who are 21 and over - will rise by 9.8% from April 2024, when the following will apply:
£11.44 per hour for employees aged 21 and over
£8.60 per hour for employees aged 18-20
£6.40 per hour for employees aged under 18
£6.40 per hour for apprentices
🤔 Anything else?
The chancellor announced some other measures that will be of interest to some business owners.
Currently vaping products and non-tobacco nicotine are taxed at 20% VAT, with e-cigarettes on a lower 5% rate, if they’re regulated as medicines for those trying to quit smoking. A new ‘vaping excise duty’ will be introduced for manufacturers and importers of vapes. This is likely to work similarly to the current levy on tobacco, where duty is paid on the weight of the product. There will also be a one-off increase in tobacco duty, the amount it’s set to increase by is yet to be announced.
Fuel duty will be frozen for another year and the 5p cut in fuel duty will also be extended for another 12 months.
The alcohol duty freeze will be extended until February 2025. Check out the government's website for a full rundown of the current alcohol duty rates.
Tobacco duty will increase (no new rate has yet been set).
The UK’s windfall tax on the profits of oil and gas companies will now run until March 2029. This is expected to raise an estimated £1.5 billion.
Hunt also mentioned briefly there will be £362 million invested in manufacturing in the UK and he also claims to support British farmers with £125,000 in this budget.
£160 million investment in Great British Nuclear, promoting more jobs to power one-quarter of the UK’s electricity generation by 2050. It’s estimated that Great British Nuclear will bring £120 million to green initiatives nationwide and contribute towards a new grid system.
£200 million to fund the Growth Guarantee Scheme, an extension of the Recovery Loan Scheme. When the current scheme ends in June 2024, it will be replaced by the Growth Guarantee Scheme, which will run until March 31, 2026.
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We’ll be back with Issue #79 of The Backbone on Friday, March 8 💐