What was in the Spring Budget for UK businesses?

From VAT threshold changes to National Insurance reform, the 2024 Spring Budget has significant ramifications for UK business owners.

According to HM Treasury, the Budget will deliver the following benefits to businesses in Scotland:

• National Insurance cut by a further 2 pence. This puts £900 a year back into the average worker’s pockets combined with changes at Autumn Statement. For self-employed people, this saving is £650 per year.
• New tax reliefs and investments to help establish the UK as a world leader in high-growth industries such as the creative sector, advanced manufacturing and life sciences.
• Backing for the UK’s high growth sectors, including supercharging SMEs by raising the VAT registration threshold to £90,000 across the UK.
• Extending the UK Recovery Loan Scheme as it transitions to the Growth Guarantee Scheme, supporting 11,000 SMEs to access the finance they need.
• Freezing alcohol duty again until February 2025 and maintaining the freeze on fuel duty until March 2025.
• Extending the Investment Zones programme in Scotland from five to 10 years, meaning IZs will have access to a £160m funding envelope, per IZ, over 10 years.
• The government will make available up to £10million of funding to SaxaVord Spaceport in Shetland to support orbital launch in 2024, subject to due diligence.
• The Chancellor also committed to extending full expensing to the rental and leasing sectors in a landmark shift.

Reaction

The announcements were given a mixed reaction by the North-east business community.

Vishal Chopra, Head of Tax for KPMG Scotland, said the chancellor failed to pull any rabbits out of the hat when it comes to business.

He said: “There was relatively little of note for businesses. The extension of full expensing to leasing has been largely anticipated although the Chancellor’s comment that this would happen when ‘finances allow’ may raise some eyebrows as to timing. The extension of the windfall tax on energy providers to 2029 will be a disappointment for affected businesses, particularly those based in the North East of Scotland.

“There were, however, some pieces of good news scattered around with announcements of a freeze to alcohol duty which will support the hospitality sector, as well as more generous tax incentives for the creative sector.

“All eyes will now turn to the election and, if dates allow, a potential Autumn Statement later in the year. Tax is currently failing to be a dividing line between the two main parties but there is still time.”

Susie Walker, partner and Head of Tax at Johnston Carmichael, added: “After confirming a further 2p cut in National Insurance and announcing an increased child benefit threshold, the Chancellor said his Budget would deliver more jobs, more investment and lower taxes, but it was disappointingly short of incentives for the corporate world.

“There was no mention of initiatives to encourage investment into startups, such as the Enterprise Investment Scheme, and nothing to encourage big corporates to invest. Other than the extension of the levy on oil and gas profits, it was a Budget for those with a vote.

“The death of Furnished Holiday Lettings, which enabled short term let operators to offset some of their costs, will be unpopular with those who operate tourist businesses and are still recovering from the impact of Covid. It could also have a significant impact on diversified farming businesses.

“Incorporating freezes on fuel duty and alcohol duty, it was a Budget for the employee and not the shareholder.”

Meanwhile, Munro's Travel, a leading travel management company in Aberdeen, expressed its concern over the increase in Air Passenger Duty (APD) for non-economy flights.

Managing director Murray Burnett said: “The increase will impact the cost of travel for business clients, who rely on international flights to conduct their operations and trade. Some industry experts are estimating that the change will increase long haul business class rates by 12%. This measure may have a negative impact on the competitiveness and productivity of the Scottish economy, especially in the energy sector, which is already facing challenges due to the pandemic, the Brexit transition and with the announcement in the budget that the windfall tax will be extended.