Spring Budget 2024: Will the changes affect your business?

On 6 March Chancellor of the Exchequer Jeremy Hunt announced the Spring Budget, which he called a ‘budget for long-term growth’.

During the statement, the Chancellor referred frequently to business-friendly measures announced in his previous Autumn Budget 2023. While this budget was relatively light on new plans to support businesses, there were a few developments on previous policies.

In this post, we cover the points that relate to small businesses, and discuss what they mean for you.

In this post

• VAT registration threshold rises to £90,000
• Changes to angel investment rules reversed
• Another National Insurance tax cut for employees
• Another National Insurance tax cut for the self-employed
• Consultation on a new marketplace to make UK IPOs more attractive
• New creative sector industry reliefs
• No updates on the merged R&D schemes
• Get essential news and updates

VAT registration threshold rises to £90,000

From 1 April 2024, your business will only have to register for Value Added Tax (VAT) when you have an annual taxable turnover of £90,000. Previously the limit was £85,000.

Through this first increase to the VAT registration threshold in seven years, the government aims to reduce the admin and cashflow burden on small businesses. There’s no change to the rate at which everyone pays VAT, but small businesses will now not need to VAT register until they earn an additional £5,000 of taxable turnover per year.

Changes to angel investment rules reversed

At the beginning of the year, the government raised the financial threshold at which investors could invest in startups and access angel investment protections. This move attracted backlash, with critics suggesting it would significantly limit the amount of investment available to startups and disproportionately exclude women, minorities and those based outside of London from the startup ecosystem.

The full Spring Budget document confirmed that the government would reinstate the previous eligibility criteria for the time being.

Another National Insurance tax cut for employees

The chancellor has announced a further 2p reduction in the rate of employee National Insurance Contributions (NICs), from 10% to 8%. The government had already introduced a 2% cut in the Autumn Budget of last year.

For employees (including founders who receive a salary from their business), this means they can keep more of their salary. This reduction means a worker on a salary of £35, 400 will receive just over an extra £450 per year .

The new rate of 8% applies from 6 April 2024.

Another National Insurance tax cut for the self-employed

The main rate of National Insurance for self-employed people is also dropping again by 2p after a decrease of 1p announced in the Autumn Budget.

Consultation on a new marketplace to make UK IPOs more attractive

The UK government is considering launching a new system called the Private Intermittent Securities and Capital Exchange System (PISCES) this year. This system would allow shareholders in private companies to sell some of their shares on a limited number of days per year, even before the company goes public through an IPO.

The motivation behind PISCES is to boost the UK’s capital markets and make them more attractive for companies to list and raise funds. It’s hoped that PISCES will boost the pipeline of future IPOs in the UK. Currently, many UK companies are choosing to list in the US instead.

For startup founders and investors, this new crossover between a public and a private market could provide earlier exit opportunities.

New creative sector industry reliefs

A variety of measures were introduced that could impact production or film companies.

From April 2025, there will be an increase to the rate of tax credit available to UK visual effects costs in film and high-end TV production. Additionally the 80% cap will be removed for qualifying expenditure comprising of UK visual effect costs.

An enhanced tax credit is going to be available on qualifying film production expenditure, called the Audio-Visual Expenditure Credit, (AVEC) for films with a production budget below £15 million, provided it meets the requirements of the new British Film Institute test.

A 40% reduction in business rates bills until 2034 will be made available to English film studios.

No updates on the merged R&D Scheme

The Spring Budget contained no new information about the merging of the two R&D tax credit schemes (SME and RDEC), due to take effect in April 2024.