The 2024 Spring Budget: What to Look Out For

As the last major fiscal event that’s likely to occur before the next general election, all eyes are on Chancellor Jeremy Hunt’s budget announcement on Wednesday 6^th March. UK businesses in particular, will be keen to see how any changes impact their day-to-day operations after a string of economic struggles.

After the turmoil caused by COVID-19, small businesses across the country have hardly had time to reset. No sooner had the pandemic finished, than the Russian invasion of Ukraine, the cost-of-living crisis, and soaring inflation rates set about hindering UK companies further. With news last month of Houthi attacks on shipping vessels raising costs for British firms too, SMEs nationwide will be hoping for some good news from the government.

Autumn’s budget provided a mixed bag for business owners, with positive changes such as the permanence of full expensing being offset by increases in the National Living Wage. But while businesses will be looking for some help in the form of a beneficial spring budget, how likely are they to actually receive it?

How likely are tax cuts?

If ever there was a time to expect tax cuts, it would likely be now. Historically, crowd-pleasing cuts have been announced in the final budget before a general election, only to have rates increased again in the first budget afterwards. Although opinion polls suggest that the Conservative Party may not be in office for the next budget, this may only serve to make it easier to introduce cuts that they won’t have to implement themselves.

The Conservatives have been keen to promote an image of being the ‘low-tax’ party recently. At the World Economic Forum in Davos, Hunt even hinted that he could be poised to cut more taxes in the upcoming budget. Warning against this, the IMF (International Monetary Fund) suggested that any cuts made would probably need reversing soon after. With Labour potentially in the hotseat by then, however, this may not deter the Chancellor from his plans.

What are UK businesses hoping to see?

There are a number of changes that could make life easier for beleaguered UK businesses, with some of the rumoured announcements having the potential to provide a positive effect if implemented. Bel Turpin, Business Development Manager at Turpin Accounting Services, explained that “recent tax policy changes have stirred discussions amongst small businesses, especially the increase in the tax allowance threshold offering relief, easing the financial burden and providing flexibility for investment. The proposed reduction in National Insurance contributions is also welcomed as it lowers operational costs and stimulates economic activity.

“Raising the VAT threshold will benefit SMEs, allowing them to expand before facing VAT payments, reducing administrative burdens, and fostering entrepreneurship. Freezing fuel duty, meanwhile, will ease operational costs for businesses reliant on transportation, giving stability amid fluctuating fuel prices.

“Proposed changes to child benefit thresholds addressing the unfairness of the current household rulings aiming to reflect individual parent earnings rather than household income are welcomed by SME owners. Upcoming business rate reform in the hospitality sector could also offer relief to struggling businesses, easing financial burdens and promoting resilience”.

Which industries might be affected?

Elsewhere, there are murmurs of incoming changes that could impact upon certain industries. Reports suggest that vapes could be subject to a similar tax to that of tobacco. This could possibly lead to sellers having to absorb these fees with higher prices, and potentially, a drop off in custom.

There has also been enough noise to suggest that a raise in duty for flying business class could come into effect. This will have airlines keeping an eye on developments on the lead-up to Wednesday’s budget in case their industry is affected.

Outside of these two changes, there may also be a reinstatement of the VAT Retail Export Scheme. This scheme allowed overseas visitors to enjoy tax-free shopping, but was withdrawn at the end of 2020. This withdrawal has been roundly criticised since, with a negative impact felt in retail and hospitality sectors as a result of the change. Heathrow airport is the latest of a chain of dissenting voices to complain about the withdrawal, and it wouldn’t be a surprise for a reversal on this to be announced.

Worried that the upcoming budget could hinder your business?

You’re certainly not alone. Thankfully, there are steps you can take to make things easier. Whether it be the renegotiating of debts, restructuring of your business, or even closing up and starting afresh, we ‘ve got the solutions to suit any company.

We’ve helped countless businesses to navigate difficult situations and have been trusted by directors nationwide to deliver honest and effective advice. Companies across most sectors now are struggling with rising inflation, the cost-of-living crisis, and soaring energy bills. Call us on 0800 975 0380, or email [email protected] for a free consultation to find out how we can help.