Spring Budget 2024: the lowdown for small businesses

Emily Coltman FCA
Chief Accountant

In what is likely to be his final pre-election Budget, Jeremy Hunt unveiled a series of tax and spending measures that will affect small businesses and landlords in the UK.  

The Chancellor announced further cuts to National Insurance, an increase to the VAT registration threshold and changes that will affect travel, lending, managing property and much more for small business owners and landlords.

I’ve pulled out what I consider to be the most important changes for small businesses from the Chancellor’s speech and HM Treasury’s report. Here are my key takeaways:

Further cuts to National Insurance

The Chancellor has announced further cuts to National Insurance (NI).

From 6th April, the main rate of Class 4 self-employed NI contributions reduces to 6%. This reflects an additional cut of 2% announced today on top of the 1% cut announced in the Autumn Statement. The Chancellor said the reduction would mean an average self-employed person on £28,000 a year would save £650 a year (when combined with the abolition of Class 2 NICs announced in the Autumn Statement).

The Class 1 employee’s NI contributions main rate will also be cut by 2% from 10% to 8% from 6th April. 

In last November’s Autumn Statement the Chancellor abolished compulsory Class 2 self-employed NI from April this year. 

VAT registration threshold rises

The VAT registration threshold will rise from £85,000 to £90,000 from 1st April 2024. 

If your annual VATable sales in the last 12 months are above the threshold - or they are set to pass that limit within the next 30 days - then you must register for VAT. This is the first time the threshold has been increased since April 2017. You can find out more about registering for VAT on HMRC’s website or by reading our guide. 

The VAT de-registration threshold is also being increased, to £88,000, from 1st April 2024. This means that if your VATable sales fall below that level, you're allowed to de-register. This threshold is currently set at £83,000.

Recovery Loan Scheme extended and renamed Growth Guarantee Scheme

The Recovery Loan Scheme - a government initiative designed to help businesses affected by the Covid-19 pandemic to secure financial support from banks and other lenders - has been extended until the end of March 2026. 

The scheme offers a 70% government guarantee on loans to SMEs of up to £2 million in Great Britain, and £1 million in Northern Ireland.

For more details on how the scheme works see the Recovery Loan Scheme page in our glossary. 

HMRC guidance on retraining tax deductibility

The government has published new guidance around the tax deductibility of training costs for the self-employed. This guidance ensures that updating existing skills, maintaining pace with technological advancements, or changes in industry practices, are allowable costs when calculating taxable profits, in other words they can be used to reduce the amount of profit a business owner pays tax on.

Furnished Holiday Lettings regime abolished

The Furnished Holiday Lets (FHL) regime, which offered certain tax advantages to people who let out property as a holiday home rather than as a long-term let, is to be abolished in April 2025. 

This means that short-term and long-term lets will be treated the same for tax purposes. Currently, there are special tax rules for rental income from properties that qualify as furnished holiday lets, which, for example, allow property owners to claim Capital Gains Tax reliefs otherwise available only to traders.

You can find out more about furnished holiday lettings on the government website.

Higher rate of Capital Gains Tax on property reduced

The higher rate of Capital Gains Tax (CGT) on residential properties will be cut from 28% to 24% from 6th April 2024. The lower rate will remain at 18%. 

New ISA introduced and overall ISA allowance increased

A new UK ISA will be launched to offer UK investment opportunities for savers. The UK ISA will have a tax-free allowance of £5,000, in addition to the existing ISA allowance. This increases the tax-free investment allowance from £20,000 to £25,000. 

High Income Child Benefit Charge threshold increased

Welcome news for parents: the threshold for High Income Child Benefit Charge will go up from £50,000 to £60,000 from 6th April 2024. The taper range - the level above which child benefit must be fully repaid - will increase from £60,000 to £80,000.

Duty rise for business class airfares

Air Passenger Duty (APD) for premium economy, business and first class passengers (standard and higher rate passengers) will increase to take recent high inflation into account. APD for economy passengers will remain frozen. 

Fuel duty frozen

Fuel duty will be frozen for another year, extending the 5p cut first introduced in 2022 until March 2025. 

To learn more about all the changes announced in the Budget, you can read the full report on the government’s website.