Press Releases

Spring Budget prioritises vote-winning measures with SMEs left behind, says TWP

Following Chancellor Jeremy Hunt’s Spring Budget, Surrey-based accountancy firm, TWP cautions that Mr Hunt has targeted individuals with tax cuts at the expense of small businesses.

Outlining his ‘Budget for long-term growth’, the Chancellor placed a heavy emphasis on relieving the financial burden on families and working individuals following a period of high living costs and inflation.

The headline tax cut of two per cent on employee National Insurance Contributions, set to fall to eight per cent for employees and six per cent for the self-employed from 6 April 2024, formed the basis of this approach.

“A further cut in National Insurance is clearly going to be welcomed by working people,” said Paul Hawksley, Managing Partner at TWP. “But, as we saw with the Autumn Statement, employers continue to be left behind. While this lower rate of National Insurance is great for individuals, we have to question why this is not being extended to employers.”

Even the most significant measure for SMEs, the announced rise in the threshold at which businesses and sole traders must register to pay VAT from £85,000 to £90,000, was a double-edged sword.

“Despite the benefits,” said Paul, “we should note that this is the first rise in seven years, which means that some businesses may not feel the benefit.”

Beyond changes to the VAT threshold, TWP warned that other measures unveiled in the Budget, revealed a ‘voter-first’ approach to this Budget.

In a bid to assuage concerns over the fairness of the High Income Child Benefit Charge, a threshold increase to £60,000 was announced, alongside a promise to overhaul the system to a household basis by 2026.

The Chancellor’s leading measures revealed a “person-centred approach to the Budget which reflects the fact that businesses cannot vote”, says TWP.

“However, it’s important to note that businesses were not neglected entirely and have been the primary beneficiaries of a number of recent Budgets and Statements.”

In particular, said TWP, the Chancellor announced reliefs for film and television production, arts and performance – with new tax credits for independent UK films and the permanent introduction of tax reliefs for touring and non-touring performing arts.

This came in addition to support for the hospitality sector – including another freeze on alcohol duty until February 2025.

The Budget also carried potential future benefits for businesses with high plant and machinery costs, with Full Expensing capital allowances to be extended to leased assets “when fiscal conditions allow”.

“This is excellent news for SMEs with high capital costs,” said Paul. “It does demonstrate a commitment to helping businesses make necessary investments without having to shoulder all the costs.

“We can also say the same for the increased VAT threshold, which has the potential to reduce a major source of fiscal drag for small businesses.”

“Despite this, while there were plenty of measures in the Budget designed for growth and getting the UK to the forefront of certain industries, we can see that there wasn’t enough support for small businesses as a whole.

“Outside of specific industries, those measures just weren’t there in sufficient quantity.

“Although, that doesn’t mean that this was a poor Budget for SMEs or that it purely focused on individuals, because this isn’t the case.

“In fact, some businesses will benefit from measures which also target individuals, such as the freeze in fuel duty for another 12 months.

“What it does mean is that the Treasury’s priorities are currently elsewhere, so businesses will need to proceed with caution as new economic measures target support at individuals prior to a general election.”

To find out more about TWP’s full range of accounting, tax and business advisory services, please visit www.twpaccounting.co.uk.