Chancellor Jeremy Hunt is set to deliver the Spring Budget alongside economic updates from the Office for Budget Responsibility on 6th March 2024.
Last year’s Autumn Statement promised to “back British businesses with 110 growth measures”, outlining National Insurance reforms, wage increases and business tax cuts amongst some of the plans to support the UK economy.
But with political shifts on the horizon, the Spring Budget could be one of the last remaining fiscal opportunities the current government has before the upcoming general election.
So, what are the predictions for the Spring Budget 2024, and what could they mean for small businesses?
With the cost of living continuing to affect businesses and individuals across the country, calls for corporation tax rate reduction are circulating. According to KPMG, business owners want to see the UK’s investment profile shift, alongside net-zero incentives.
But as market rates fell towards the end of last year, narrowing headroom could mean that Hunt will have to scale-back on any significant business tax cuts.
Instead, business owners may benefit from potential VAT threshold increases, which could enable SMEs to grow beyond the current £85,000 threshold without having to pay VAT.
The Institute for Government has also reported that where major cuts are unlikely, another extension of the 5p fuel duty cut could alleviate pressures on businesses reliant on vans or cars.
Their recent report revealed that the 2017 Apprenticeship Levy has “failed to reverse the decline in employer training more widely”, highlighting that the number of apprenticeships available in SMEs has fallen by 49 per cent.
The CIPD is therefore calling for reforms to the Apprenticeship Levy into a Flexible Skills Levy, which proposes more flexibility surrounding how the Levy can be spent. This could enable firms to invest in wider employee skills training beyond apprenticeships.
Reform of the Levy could increase employer investment in skills development and help tackle the UK’s dwindling labour pool – the benefits of which are likely to be felt by small businesses.
Paula Letorey, Workforce Partner at PwC explains that alongside Apprenticeship Levy reform, there are other options for the Chancellor to consider:
“[...] corporate incentives such as NIC relief or ‘super deduction’ for employment costs if an employer employs targeted populations (i.e. older workers, those returning from long term leave, younger workers etc).
“For workers, changes to the way in which benefits are reduced/removed for individuals at specific income levels. In addition, a key to future sustained growth and high employment levels will be skills development”.
Employment incentives like these may benefit smaller businesses, particularly those currently competing with larger firms for the limited numbers of skilled workers available in the UK.
They are also calling for the government to address the 5.3 million UK households in debt to their energy supplier due to being unable to keep up with soaring bill payments. One solution includes investing in the energy efficiency of business premises across the UK.
Struggling businesses could therefore see the Energy Bills Discount Scheme extended and potential investment into the quality of their premises, which could not only improve their efficiency, but have a knock-on effect in terms of customer satisfaction and employee wellbeing.
Women’s Budget Group explains that “The HICBC claws back Child Benefit via the tax system when the recipient, and/or their partner, earns £50,000 or more a year.”
Hunt acknowledged the flawed system when it came to dual income families earning £50,000 each when compared to a single parent on £100,000.
Women’s Budget Group have emphasised the disadvantages the current system brings single parents households, with many calling for revisions to the HICBC.
With more accessible childcare measures, there are hopes that more people will become economically active, boosting the numbers of those seeking employment. In turn, this will contribute to easing labour market shortages. For firms, more efficient childcare systems are likely to help boost the productivity of employees.
Whilst rates in England remained the same in the autumn statement, relief in Wales will shrink to 40 per cent – meaning small businesses including cafes, shops and pubs could continue to face financial challenges despite falling inflation.
If the Chancellor is to keep voters happy, business rates reform could instil a new confidence in the UK’s SME owners.
Keep an eye out for our Budget review next week, where we’ll break down what it means for SMEs, plus get reactions from real small business owners across the community.
Want more from UKBF? Upgrade to a Business Membership and make the most of exclusive benefits including premium forums, partner offers and member-only content. You could save your business up to £400 a year by upgrading your account today.
Last year’s Autumn Statement promised to “back British businesses with 110 growth measures”, outlining National Insurance reforms, wage increases and business tax cuts amongst some of the plans to support the UK economy.
But with political shifts on the horizon, the Spring Budget could be one of the last remaining fiscal opportunities the current government has before the upcoming general election.
So, what are the predictions for the Spring Budget 2024, and what could they mean for small businesses?
Tax cuts
In a last roll of the dice to win voters and grow the economy, are tax cuts on the cards for this year’s Spring Budget?With the cost of living continuing to affect businesses and individuals across the country, calls for corporation tax rate reduction are circulating. According to KPMG, business owners want to see the UK’s investment profile shift, alongside net-zero incentives.
But as market rates fell towards the end of last year, narrowing headroom could mean that Hunt will have to scale-back on any significant business tax cuts.
Instead, business owners may benefit from potential VAT threshold increases, which could enable SMEs to grow beyond the current £85,000 threshold without having to pay VAT.
The Institute for Government has also reported that where major cuts are unlikely, another extension of the 5p fuel duty cut could alleviate pressures on businesses reliant on vans or cars.
Apprenticeship Levy reform
Although funding to address the UK’s skills and labour shortages was announced in the Autumn Budget, The Chartered Institute of Personnel and Development (CIPD) has insisted that more reforms are needed if the country is to tackle its productivity challenges.Their recent report revealed that the 2017 Apprenticeship Levy has “failed to reverse the decline in employer training more widely”, highlighting that the number of apprenticeships available in SMEs has fallen by 49 per cent.
The CIPD is therefore calling for reforms to the Apprenticeship Levy into a Flexible Skills Levy, which proposes more flexibility surrounding how the Levy can be spent. This could enable firms to invest in wider employee skills training beyond apprenticeships.
Reform of the Levy could increase employer investment in skills development and help tackle the UK’s dwindling labour pool – the benefits of which are likely to be felt by small businesses.
Employment costs
In order to tackle the country’s worker shortages, PwC predicts Hunt will incorporate business incentives into his spring announcement.Paula Letorey, Workforce Partner at PwC explains that alongside Apprenticeship Levy reform, there are other options for the Chancellor to consider:
“[...] corporate incentives such as NIC relief or ‘super deduction’ for employment costs if an employer employs targeted populations (i.e. older workers, those returning from long term leave, younger workers etc).
“For workers, changes to the way in which benefits are reduced/removed for individuals at specific income levels. In addition, a key to future sustained growth and high employment levels will be skills development”.
Employment incentives like these may benefit smaller businesses, particularly those currently competing with larger firms for the limited numbers of skilled workers available in the UK.
Energy bills
Energy UK is calling on the government to continue building on the positive energy policy statements announced in the autumn, asking for tax cuts for both households and businesses and to “incentivise investment in low-carbon technologies” through introducing a green home stamp duty.They are also calling for the government to address the 5.3 million UK households in debt to their energy supplier due to being unable to keep up with soaring bill payments. One solution includes investing in the energy efficiency of business premises across the UK.
Struggling businesses could therefore see the Energy Bills Discount Scheme extended and potential investment into the quality of their premises, which could not only improve their efficiency, but have a knock-on effect in terms of customer satisfaction and employee wellbeing.
Childcare reform
Many business owners juggling childcare alongside keeping their firm afloat could benefit from childcare reforms and revisions set to be announced in the upcoming spring statement. Predictions come as the Chancellor responded to the “unfair” and controversial High Income Child Benefit Charge on The Martin Lewis Money Show.Women’s Budget Group explains that “The HICBC claws back Child Benefit via the tax system when the recipient, and/or their partner, earns £50,000 or more a year.”
Hunt acknowledged the flawed system when it came to dual income families earning £50,000 each when compared to a single parent on £100,000.
Women’s Budget Group have emphasised the disadvantages the current system brings single parents households, with many calling for revisions to the HICBC.
With more accessible childcare measures, there are hopes that more people will become economically active, boosting the numbers of those seeking employment. In turn, this will contribute to easing labour market shortages. For firms, more efficient childcare systems are likely to help boost the productivity of employees.
Business rates
With businesses within the hospitality sector continuing to feel the pinch of the cost-of-living crisis, many within the sector and beyond are calling for action to bring business rates down.Whilst rates in England remained the same in the autumn statement, relief in Wales will shrink to 40 per cent – meaning small businesses including cafes, shops and pubs could continue to face financial challenges despite falling inflation.
If the Chancellor is to keep voters happy, business rates reform could instil a new confidence in the UK’s SME owners.
Keep an eye out for our Budget review next week, where we’ll break down what it means for SMEs, plus get reactions from real small business owners across the community.
Want more from UKBF? Upgrade to a Business Membership and make the most of exclusive benefits including premium forums, partner offers and member-only content. You could save your business up to £400 a year by upgrading your account today.
