James Pinchbeck, partner at Streets Chartered Accountants, comments on the Spring Budget.
The headline grabbing announcement from the Chancellor Jeremy Hunt’s Spring Budget, and perhaps his last before an election, was the 2% cut in rate of National Insurance (NI). This second cut follows a similar cut given in last year’s Autumn Statement and comes with an election looming.
For some it might have felt like that ubiquitous loss leader that retailers prompt to get you to buy so as to take your mind off the fact that whilst making such a purchase, perhaps one you hadn’t intended to buy, you might buy something else at higher price and margin. In this case, the reduction in NI perhaps coupled with the freezing of alcohol duty, the fuel price cap and changes to child benefit are all sweeteners to give us a sense that things are getting better and we are better off than we might be really.
This aside there were a number of key announcements that will affect both businesses and individuals.
The freeze on alcohol duty no doubt will be welcome for both consumers and the licenced trade. Perhaps though more could have been done in light of the cost-of-living crisis and the impact it is having on our pubs, clubs and eateries.
Plans to scrap the furnished holiday lets regime perhaps comes with a double edged sword in that hopefully it can address the issue of access to affordable homes for those living in holiday destinations, but equally will it adversely affect the provision of holiday accommodation for holiday makers.
Turning to property, there was a reduction in the higher rate of property capital gains tax from 28% to 24% – a move aimed to stimulate the market for sales of properties caught by the higher tax rate. The Chancellor also announced the abolition of stamp duty relief for those buying more than one dwelling, a relief known as the Multiple Home Relief.
Many small businesses including the self employed will have welcomed the news that the VAT registration threshold will rise from £85,000 to £90,000 from the start of April.
For those businesses looking to invest in plant and machinery, whilst no date was given as to when it might come into effect, the Chancellor stated that plans were in place to draft new legislation so that leased assets could be included in Full Expensing for the purchase of plant and machinery.
Whilst this may not affect many reading this, Jeremy Hunt confirmed the non-domiciliary status will be abolished and it will be replaced by a ‘simpler and fairer’ system from April 2025. The current system means that those living in the UK with overseas links and financial interest only pay UK tax on money earned here, going forward they will be required to be taxed on worldwide income.
For those engaged in the creative industries sector, news of the £1bn additional tax relief must have been as good news as perhaps being nominated for a BAFTA. Not least that measures include a tax credit for UK independent films with budgets under £15m.
Also announced was a 40 per cent relief on gross business rates until 2034 for eligible film studios. The Chancellor also said the government will remove the 80 per cent cap for visual effects costs in the audio-visual expenditure credit.
When it comes to the public sector though it would seem the only real beneficiary was the NHS with a commitment to a public sector productivity plan. There were no real announcements around the much needed support for education, skills, emergency services, nor our local authorities, all facing the pressures of the cost of living crisis and often increasing demands.
Overall, was it a Budget to gain or even regain voter confidence, or did it fall short? Did it feel more like a government that is tired and lacking ideas and one that has perhaps lost its way?
Perhaps we will know more over the next few weeks and months on the run up to the 2024 election.
For the devil in the detail there is still time to book for Streets Chartered Accountants’ post Spring Budget webinar which takes place from 11am until 12noon on Thursday 07th March.
Register to join us live and/or to receive a post broadcast recording to watch on catch up. https://www.streetsweb.co.uk/about/events/spring-budget-2024/
