On Wednesday 6 March, the Chancellor Jeremy Hunt delivered his Budget statement in Parliament. It contained a number of measures relevant to small business owners and the self-employed. Here is our BFA round-up of some of the key announcements which may affect you and your business:
Lowering taxes
The Chancellor made further changes to National Insurance contributions (NICs), following the cuts made in the Autumn Statement 2023. The rates for NICs will be cut further for both employees and the self-employed from 6 April 2024.
There was also a cut in the higher rate of Capital Gains Tax on residential property disposals and the creation of a new ISA allowance to encourage investment in promising UK businesses.
VAT
The Chancellor has responded to pressure from business groups by raising the threshold for VAT registration to £90,000. The VAT threshold will rise from £85,000 to £90,000, with effect from 1 April 2024.
Employees and NICs
Self-employed National Insurance Contributions (NICs) will be reduced from eight per cent to six per cent, with effect from 6 April 2024. Meanwhile, employee NICs will fall from 10 per cent to eight per cent.
National Living Wage and National Minimum Wage
The government announced increased rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from 1 April 2024. In addition, from 1 April 2024 the NLW will be extended to 21 and 22 year olds. The rates which will apply from 1 April 2024 are as follows:
| NLW | 18-20 | 16-17 | Apprentices | |
|---|---|---|---|---|
| From 1 April 2024 | £11.44 | £8.60 | £6.40 | £6.40 |
The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over.
Company vans
For 2024/25 the benefit remains £3,960 per van and the van fuel benefit charge where fuel is provided for private use remains £757. If a van cannot in any circumstances emit CO2 by being driven, the cash equivalent is nil. The current level of fuel duty will be frozen for 12 months.
Making Tax Digital for income tax
The government has announced the outcome of the review into the impact of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) on small businesses and intends to proceed with implementation from April 2026. The government will also ensure taxpayers who join MTD from 6 April 2024 are subject to the government’s new penalty regime for the late filing of tax returns and late payment of tax.
Training for Self-employed
HMRC has published new guidance around the tax deductibility of training costs for sole traders and the self-employed. This guidance ensures that updating existing skills, maintaining pace with technological advancements, or changes in industry practices, are allowable costs when calculating taxable profits.
Business Rates
The small business multiplier will be frozen for another year, while the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25. The standard multiplier will be uprated in line with the Consumer Prices Index for September 2023. These changes will take effect from 1 April 2024 in England.
Simplification measures
The government has announced a package of measures that supports its ambition to simplify and modernise the tax system, which includes the following:
- To simplify the process for employees claiming tax relief on their expenses, and for HMRC to automatically process claims, the government is designing a new, online service for employees to claim tax relief on all of their expenses in one place.
- The government will legislate to introduce a route for people to apply for National Insurance Credits for parents and carers for tax years where they have not claimed Child Benefit, to ensure that people do not miss out on their State Pension entitlement.
