The latest fiscal roadmap laid out in the Spring Budget 2024 has elicited a mixture of anticipation and scepticism, particularly among small business owners navigating the labyrinthine world of UK taxation and economic policy. At Nordens, where our expertise spans sectors like Property & Construction, Sports Media & Entertainment, Recruitment, Professional Services, and Technology, we’ve taken a deep dive into the key updates.
Here’s our take on the recent developments, coupled with the insight that despite a comprehensive update, the overall feeling is one of anticlimax, particularly with the absence of anticipated changes to Inheritance Tax (IHT).
As we parse through the key updates for businesses, it becomes evident that the budget has targeted areas ripe for stimulation through the abolition of tax regimes and the allocation of investments. However, it’s crucial to approach these changes with a nuanced understanding of their implications.
Property & Construction
The Chancellor earmarked a hefty £242 million for investments in Barking Riverside and Canary Wharf, signalling a robust drive towards not only erecting nearly 8,000 new homes but also transforming Canary Wharf into a thriving life science hub.
However, the property sector is set to navigate through some turbulent tax changes. The abolition of the furnished holiday lettings tax regime, along with the scrapping of multiple dwellings relief, denotes a stark shift. Conversely, there’s a silver lining with the reduction of the higher capital gains tax rate on property from 28% to 24%, alongside significant alterations to the non-dom tax system which are poised to impact UK residents with foreign tax domiciles significantly.
Recruitment
The Chancellor’s budget brings a glimmer of hope to the recruitment sector, wrestling with 90,000 unfilled vacancies. The introduction of 30 free hours of childcare heralds the potential for an additional 60,000 parents to re-enter the workforce over the next four years. This is a pivotal step towards addressing labour shortages across various industries.
Technology
The technology sector stands to gain from the government’s move to unlock more pension fund capital, offering tech businesses increased powers to secure investment. This initiative could potentially supercharge the UK’s tech landscape by facilitating growth and innovation.
Sports Media and Entertainment
With the UK’s emergence as Europe’s largest film and TV production centre, the government has outlined it’s commitment to bolstering tax reliefs for visual effects, film, high-end TV, touring, and orchestral productions. This promises a vibrant future for the entertainment industry, however with very little detail announced, we will keep our eyes peeled for more information and provide insights on this when it is revealed.
The key updates so far:
- Creative tax credit to increase by 5% and the 80% cap to be removed.
- New tax credit for UK independent films with budgets of under £50 mil
General Business Outlook: Economic Growth amidst Tax Cuts
With an economic growth projection of 0.8% this year and 1.9% next year, the budget attempts to tackle inflation and fuel economic resilience. Key measures include:
- The extension of fuel duty for 12 months
- A rise in the VAT registration threshold to £90,000 from April
- 2% cuts to national insurance rates for employees and the self-employed, underlining the Governments intent to alleviate financial pressures on businesses.
- UC budget loans repayments increased from 12 months to 24 months.
- Debt relief orders £90 charge abolished.
- Fuel duty to be froze for 12 months and 5p cut to stay in place
- Alcohol duty froze until Feb 2025
- Full expensing to apply to leased assets
- There will be a new British ISA which will have an extra £5k allowance
- Abolishment of Furnished Holiday Lettings Tax regime
- Multi Dwellings Relief now abolished
- Residential Property CGT reduced to 24%
- Non Dom scheme abolished, replaced with a new residency system. New arrivals to the UK will not pay income or CGT for the first 4 years. After that will pay the same as UK residents
- New child benefit system to be introduced to account for household income from April 2026. From April 2024 the threshold will be raised from £50k to £60k and the higher threshold will now be £80k
While the Spring Budget 2024 unfurls a series of targeted interventions aimed at stimulating key sectors, it stops short of a comprehensive fiscal revolution. The noteworthy absence of updates on Inheritance Tax (IHT) alongside an overarching sentiment of underwhelm paints a picture of missed opportunities. Nonetheless, businesses are encouraged to adapt to these changes, strategising to leverage the potential benefits while bracing for the challenges ahead.
At Nordens, our commitment to guiding our clients through these fiscal fluctuations remains unwavering, ensuring your business is positioned for resilience and growth in the face of change. We will be keeping our eyes peeled for further detail on the changes, so stay tuned for updates.
If you have any questions or concerns on how these changes impact your business, please don’t hesitate to get in touch.
