Rather than the usual Tuesday newsletter, I decided to delay it a day in anticipation of having something helpful to cover from the Budget.
So, Today, Jeremy Hunt delivered the Spring Budget statement, the last of this current political term. In theory, this was the Conservative’s big opportunity to regain some lost voters. Still, with the current state of the economy, my expectations were very low for any meaningful help for small businesses.
The major leaked announcement was the expected further cut in employees NI by another 2%, on top of the 2% announced in last year’s Autumn Statment.
What I really wanted to see was a change to the recent Corporation Tax rates and bands. The £50,000 and £250,000 bands at which you move from the small rate of CT (19%) to the main rate of CT (25%) are far too low, especially when these are divided by other associated companies - but I knew there was virtually no chance we would see this…
Here is a breakdown of the most relevant changes that were actually announced today for small businesses:
The Recovery Loan Scheme is to be continued and renamed the Growth Guarantee Scheme, which will help SMEs access the funding they need.
Full expensing for the purchase of large capital items was made permanent in the last budget. Today, they announced that full expensing will now apply to leased assets, too. This will come in “as soon as it’s affordable”. Will keep an eye out for draft legislation on this.
From 1 April, the VAT threshold will increase from £85,000 to £90,000. This was unexpected and welcome for the smallest businesses, but it doesn’t really fix the problem. We will still see a hard drop-off of businesses growing beyond this threshold where VAT kicks in.
Apparently, we are on track to be the world’s next Silicon Valley…
Aside from various measures to encourage pension funds to invest more in the tech industry, a new British ISA will be introduced – allowing people to invest up to £5,000 more, tax-free a year in UK assets. This is on top of the existing £20,000 annual ISA allowance.
Three fairly major changes to taxes on property:
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The furnished Holiday lettings regime, which makes it more profitable for second homeowners to let out their properties to holidaymakers rather than to long-term tenants to rent, will be abolished. This is from April 2025
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Multiple dwellings relief for Stamp Duty
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The higher rate of capital gains Tax on properties, currently 28%, is now to be reduced to 24%
The current tax system for those who are resident in the UK but not domiciled (Non Dom) is being abolished. A new residence based system from April 25. Under the new regime anyone who is UK resident for more than four years will pay UK tax on their foreign income and gains as is the case for other UK residents.
The changes to Non Dom’s will be used to fund changes to Child Benefits. The threshold at which this benefit is removed/paid back was currently £50k on an individual. This will now be moved to a household income system from April 2026. From today though, we will see two other changes. The threshold will be raised from £50,000 to £60,000 and the higher threshold at which you loose all of the benefit will raise from £60,000 to £80,000.
This is something I can totally get behind. The current system is crazy in that it penalises single income households. Currently two partners earning £49,000 each would receive full child benefit but one income households would start to have it removed from anything over £50,000. So until 2026, at least we are seeing an increase in the thresholds.
We did also see the much leaked reduction in National Insurance. From April the 6th the rate drops from 10% to 8% for employees and 8% to 6% for self-employed.
My take on this budget is that there really wasn’t much to get excited about for business owners at all. The employee NI cut, and changes to the child benefit will help individuals, but that’s about it.
There were a few surprising updates on Non-Dom, properties and the VAT registration threshold.
As always, with the budget, the devil is in the details. I will provide updates as and when we see some more details.
Back to the usual schedule next week, with the post going out Tuesday morning.
About the author
Luke Desmond
Fractional CFO for Tech, eCommerce & SaaS. CEO @Crisp_Acc provides virtual finance functions. Co-Founder @getvaulta SaaS Startup for accountants.