Spring Budget Update: what does it mean?

Wednesday March 6, 2024

The Chancellor of the Exchequer, Jeremy Hunt, has delivered the Spring Budget, outlining the government’s tax and spending plans.

It was a quiet budget for employers, with the big story being a cut to National Insurance Contributions. However, there was several measures introduced which are designed to support small business growth.

National Insurance cut again

After cutting National Insurance from 12% to 10% in his Autumn Statement, Hunt has repeated the act this Spring.

As of 6th April 2024, Employee National Insurance Contributions will stand at 8%. These cuts are designed to encourage more people to seek employment and make work pay.

As an employer, it is vital that you ensure your payroll software recognises this change within the next month. You may also find it valuable to inform your employees of this change in their first payslip following its implementation.

Measures to support business growth

The Chancellor also announced a range of measures designed to support the growth of small businesses. However, the impact of these changes on you will be heavily dependent on your business size, sector and growth plans.

Firstly, the alcohol and fuel duty freeze have been extended, which is positive news for the hospitality and transport sectors respectively. Further welcoming news for the hospitality sector came in the 75% business rate relief being extended for another year.

For smaller businesses, the VAT registration threshold will increase from £85,000 to £90,000 from 1st April. This will allow thousands more businesses to operate without paying Value Added Tax, although many were expecting a larger increase here.

The Recovery Loan Scheme, first introduced during the pandemic, will be extended and renamed, becoming the Growth Guarantee Scheme, with £200m of funding announced. The scheme offers a 70% government guarantee on loans to SMEs of up to £2m in Great Britain.

Finally, leased assets were added to the permanent full expensing regime that Hunt first announced in the Autumn Statement. This should have a particular impact on the manufacturing, construction and automotive industries. This change will come in when it is affordable to do so.

Got a question?

If you need any help digesting the impact these changes may have on your HR, your local expert is on hand to help. Contact The HR Dept today to help prevent any people problems in your organisation.

Preventing People Problems

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