On Wednesday 6^thMarch 2024 Jeremy Hunt delivered his Spring Statement outlining fiscal policy for the coming months and years, as well as predictions for the UK economy. Specifically, he stated that the economy is expected to grow by 0.8% this year and 1.9% in 2025. That is an improvement on the 0.7% and 1.4% growth rate that was predicted by the Office for Budget Responsibility in November 2023.

The government has stated that the measures announced have been introduced with “long term growth” in mind and to stimulate the economy, but with a general election just months away, some believe the changes announced are intended to secure public votes rather than to support businesses.

Whatever the underlying motives, there were several announcements that will impact UK businesses.

VAT registration threshold to rise

The threshold at which businesses have to register for VAT has increased from £85,000 to £90,000 from April 2024.

Business rates frozen for a further year

This includes 75% relief for the hospitality sector that was announced in the Autumn Statement.

National Insurance cuts for self-employed

The self-employed will see a reduction in the main rate of National Insurance Contributions of 2% (reducing from 8% to 6%). The Treasury states that this should equate to a saving of £350 a year for a self-employed person.

Recovery Loan Scheme to be extended

The Recovery Loan Scheme, which had been due to end in June this year, will be extended for two years with a new name: the Growth Guarantee Scheme.

Freeze on alcohol and fuel duty

There was some nervousness that duty would increase in this area, so many will be relieved that a freeze is in place, but there has been a one-off increase in tobacco duty.

Full expensing tax relief extended

Full expensing tax relief, which provides 100% corporation tax relief for capital expenditure, has been extended to cover leased assets.

Increased investment in green industries and manufacturing

Up to £120m more to the Green Industries Growth Accelerator to build supply chains for new technology ranging from offshore wind to carbon capture and storage.

Hunt announced a further £270m of investment into new automotive and aerospace research and development (R&D) projects, building the UK’s capabilities in zero emission vehicle and clean aviation technology.

£1bn in additional tax relief for the creative industries

Over the next 5 years an additional £1bn in tax relief will benefit the creative industries.

Other announcements included:

• Windfall tax on profits of oil and gas companies has been extended until 2029.
• The new 30 hours per week of funding for childcare has been confirmed to start in April2024 with the aim of helping more parents back into the workforce.
• From April the first Investment Zones in the North of England & the Midlands will be launched, with a 10-year package of funding benefitting local skills, R&D, local infrastructure & business investment.
• Planned growth in public sector spending kept, but with focus on productivity to save £1.8bn.
• Improving NHS productivity through digital integration and less red tape.
• Pensions triple lock rises with earnings (8.5%) from April 2024
• Working age benefits will rise by the rate of inflation at 6.7% from April 2024.

How will the Spring Statement affect your business?

If you have questions about any of the government’s announcements, such as how to benefit from the Growth Guarantee Scheme (formerly the Recovery Loan Scheme) or which assets are now eligible for the extension to the full expensing tax relief scheme, you can get in touch with us using the form below.

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