Amid the swirl of economic challenges and the anticipation of a forthcoming general election, many awaited Chancellor Jeremy Hunt’s 6 March Spring Budget with bated breath.

With the dual aim of financial management and spurring voter interest, the Chancellor laid out a blueprint intended to catalyse long-term growth.

In this blog, we look at the key takeaways from the Chancellor’s address and explore how these could affect you and your business.

National Insurance Contributions

One of the standout announcements was the further cut in National Insurance contributions for both employees and self-employed individuals.

From April, employees will see a 2% reduction in the primary rate, dropping from 10% to 8%. This, on top of the cut introduced in January, represents a significant easing, saving the average employee earning £35,400 more than £900 annually.

For self-employed individuals, there was also good news. The main rate of Class 4 National Insurance contributions will reduce from 8% to 6%.

Together with the previously announced abolition of the Class 2 National Insurance requirement, an average self-employed person earning £28,000 could save over £650 a year.

VAT Registration Threshold Lifted

In a move to reduce the administrative load on small and medium-sized businesses, the threshold for VAT registration is set to rise from £85,000 to £90,000 from 1 April 2024.

This is positive news for many SMEs, potentially freeing some from the complexities of VAT registration, supporting investment and encouraging growth.

Furnished Holiday Lettings Relief

The Government has decided to phase out Furnished Holiday Lettings relief by April 2025.

This measure aims to address housing shortages in prime tourist spots by discouraging short-term holiday lets in favour of long-term rentals.

Implications for the Property Market

The abolition of Furnished Holiday Lettings relief is expected to rebalance the housing market towards long-term rentals, particularly in popular short-term rental areas.

Meanwhile, the reduction in the higher rate of capital gains tax on residential properties from 28% to 24% from April 2024 is expected to stimulate activity in the property market.

Support for Businesses

Although less pronounced than in the Autumn Statement, the Spring Budget still brings several supportive measures for SMEs, high-growth firms and key sectors such as manufacturing, the creative industries and life sciences.

This includes the Growth Guarantee Scheme, indicating a continued commitment to the business community.

Growth Guarantee Scheme

Building on the Recovery Loan Scheme, the new Growth Guarantee Scheme is designed to support SMEs in accessing finance, marking a positive step for business growth.

Modernising the Non-Dom Tax Regime

The Chancellor proposed a refresh of the non-dom tax regime, exempting new UK residents from tax on foreign income for their first four years.

This aims to raise £2.7 billion a year by 2028/29 while helping ensure the UK remains an attractive place for international investment.

Savings and Investments

The Budget also introduced measures to boost savings and investments.

A new UK ISA allows an extra £5,000 annual investment in UK equities, tax-free. The launch of British Savings Bonds, offering a guaranteed rate for three years, is also designed to provide savers with more appealing returns.

The Bottom Line

Chancellor Jeremy Hunt’s Spring Budget set out a Government strategy aimed at tackling current economic challenges.

By reducing the tax burden on individuals and businesses, revamping the non-dom regime, and encouraging savings and investments, the Budget lays the groundwork for a more dynamic and resilient economy.

Staying abreast of these changes and adjusting your financial strategies accordingly is crucial.

At Total Accounting, we’re here to assist you and your business through these changes.

Whether you need help understanding how these updates affect your finances or planning your next steps, we’re just a conversation away.

Reach out to discuss how these updates could affect you.