The chancellor announced his Spring budget at lunchtime today, and we’re reflecting on the highlights of what you need to know, both for your business and your personal finance:
Jeremy Hunt starts with good news that the OBR expects inflation to fall below 2% within months, which is ahead of schedule (and what was forecast in the Autumn Budget). It’s currently at 4%.
National Insurance
Confirming a predicted 2% drop, employee national insurance will be cut from 10% to 8%, and self-employed NICS from 8% to 6% from April. This will save the ‘average person’ £450 per year.
Despite discussions, income tax has not changed.
Child Benefit Updates
The threshold at which parents start paying the High Income Child Benefit Charge will increase from £50,000 to £60,000, apparently meaning that ‘half a million families will gain by almost £1,300.’
British ISA
There is a plan for a new ‘British ISA’ which would allow £5,000 tax-free investment exclusively into UK firms. This ISA allowance will be on top of existing ones, and is part of a plan to make the UK the ‘world’s next Silicon Valley.’
Household Support Fund
The ‘Household Support Fund’ has been extended beyond 31 March – it will continue for six more months to allow local councils to provide support through food banks and warm space vouchers.
Fuel Duty Freeze
Tax on fuel has been frozen, and Hunt claims this “will save the average car driver £50 next year, and bring total savings since the 5p cut was introduced to around £250.”
Alcohol Duty Freeze
In the name of ‘supporting the Great British Pub’, the government will be extending the alcohol duty freeze further – from Aug 2024 to 1 Feb 2025. This cuts costs for breweries, distilleries, restaurants, nightclubs, pubs and bars.
Tax Increases
Taxes will be increased on tobacco, and for non-economy flights, and there will also be a new tax on vapes. This is perhaps to compensate for not raising income tax.
Holiday Let Restrictions
Always a hot topic in Cornwall, and today it was announced that the tax relief for furnished holiday lettings will end. Unfurnished long-term lets may now be more appealing to landlords.
Business VAT Threshold
The threshold for VAT registration will go up from £85,000 to £90,000 – some hoped it would be higher than this, as it had been frozen for 7 years previously.
In Summary:
Now that these changes have been suggested, they will be debated by MPs, before the government introduces a Finance Bill to turn the Budget proposals into law. Of course, with a general election looming this year, we can’t ever be 100% sure which of these proposed changes will stick around. It’s a tricky time to predict ahead with the economy!
If business accounting is something you’d like some help getting a handle on, our team is friendly and approachable. Whatever the size of your organisation, these are some of the services we can offer:
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