The Spring Budget 2024 included several tax and policy changes affecting small businesses, self-employed people, and employers. In this article we go through some of the key changes affecting business owners.

Empty Property Relief means business rates don’t need to be paid for the first three months a property is empty. The three-month relief period currently ‘resets’ once the property is occupied for a minimum of six weeks.

This technically means that businesses can reduce their bill for business rates through “box shifting” – moving from one property to another to take advantage of Empty Property Relief.

Following consultation, the Spring Budget 2024 announced that the current 6-week reset period would be extended to 13 weeks. The changes come into effect in England from 1st April 2024.

Those working in the creative industries may be able to claim specific types of tax relief aimed at supporting innovation in the sector. We’ve outlined some of the main changes below.

Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibition Tax Relief (MGETR)

From 1st April 2025 the rate of Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibition Tax Relief (MGETR) will be permanently set at 40% for theatres, museums, and galleries (non-touring productions), and at 45% for all orchestra and touring productions.

Film Studios Relief

Eligible film studios in England are to receive 40% relief on gross business rates. The rollout date hasn’t been confirmed beyond ‘as soon as possible’ but relief will be backdated to 1st April 2024 once it’s available.

Audio-Visual Expenditure Credit

There are several updates in this area, including:

• The introduction of a new UK Independent Film Tax Credit set at 53% for qualifying films with a budget below £15 million, where principal photography starts from 1st April 2024
• The credit rate available for the cost of visual effects in film and high-end TV will increase to 39% from April 2025
• Removal of the 80% cap for claiming visual effects costs in productions spending more than 5% of their total budget on visual effects

The current rules for claiming expenses only allow a business to claim tax relief on training costs if the expense relates “wholly and exclusively” to an existing business. It means that you can’t claim expenses for training courses you take with the intention of learning skills for a new business, or to expand an existing one into a new area.

The rules can be difficult to make sense of though. For example, a painter and decorator who goes on a course to learn bookkeeping; they need these skills to run their business but because the course doesn’t directly relate to the purpose of their business, can they make a claim?

The guidance manuals for claiming training costs have been updated to clear up some of the confusion, and explain that costs are claimable if you are:

• Updating existing skills
• Learning new skills in order to keep up with advances in technology or changes to industry practices

Originally introduced as a temporary measure, Full Expensing (FE) was made permanent in the Autumn Statement 2023. A type of first-year capital allowance, it enables limited companies to reduce their tax bill by deducting the full amount of qualifying spending from their taxable profits in the year the expense occurs.

The Spring Budget 2024 announced that assets for leasing would be included once fiscal conditions allow.

The Spring Budget 2024 included several changes to the High-Income Child Benefit Charge (HICBC), including:

• Plans to apply the charge at household level, rather than on individual earners
• An increase to the HICBC threshold from £50,000 to £60,000 from April 2024
• The rate of HICBC to be halved

The Spring Budget included changes to National Insurance rates for both employees and self-employed people.

NI updates for employees (and what this means for employers)

National Insurance thresholds (the point at which you start paying NI) are to stay frozen until April 2028, but the Spring Budget did announce a further reduction to the rate of National Insurance paid by employees.

The new rate applies to the main rate of Class 1 National Insurance paid by employees on earnings above the Primary Threshold (between £12,570 and £50,270). The rate decreased from 12% to 10% as of 6th January 2024, and will now reduce again to 8% from April 2024.

2023/24 and 2024/25 Class 1 (Primary) National Insurance thresholds and rates for employees

 
The National Insurance threshold for employers hasn’t changed, and the rate at which employers make NI contributions also remains unchanged.

What does this mean for employers?

Although the rate of National Minimum Wage and National Living Wage increases from April 2024, the point at which employers start paying National Insurance on their employees’ earnings doesn’t.

This is important, because it means that not only do employers face additional salary costs for minimum wage workers, but they will also need to make National Insurance contributions on a larger portion of their wages.

The graphic below shows how much it costs an employer to pay an employee’s salary and National Insurance contributions each month, if the employee earns minimum wage and works 35 hours a week in 2023/24, compared to 2024/25.

Do the NI changes affect company directors?

Lots of company directors choose to pay themselves a salary at or below the threshold for paying National Insurance, and then take the rest of their earnings from the business as a dividend. Paying yourself like this is often the most tax-efficient option (but not always – it depends on your circumstances!).

As such, the changing National Insurance rates don’t really affect company directors who use this arrangement – although it is worth noting that the Dividend Allowance will reduce from £1,000 in 2023/24 to £500 in 2024/25. Our online dividend tax calculator can help you work out what this means for you.

National Insurance changes for self-employed people

Changes to self-employed National Insurance originally announced at Autumn Statement 2023 were further amended in the 2024 Spring Budget.

• The removal of Class 2 National Insurance is expected to go ahead
• The original proposal to reduce Class 4 NI from 9% to 8% has been replaced by a new measure which reduces the rate to 6%

The Spring Budget included an announcement that the current tax rules around non-UK domiciled individuals would be replaced with a simpler system.

The new scheme means that from 6th April 2025 individuals won’t pay UK tax on foreign income for the first four years that they’re a tax resident in the UK, as long as they were non-resident for the previous 10 years.

The Budget announcement also focused on several areas concerning property sales and the letting of short-term accommodation.

Capital Gains Tax: A reduction to the higher rate for residential property

Capital Gains Tax is paid on the profit or ‘gain’ you make when disposing of some assets, such as property which isn’t your main residence.

From April 2024 the higher rate of Capital Gains Tax payable for property disposals will reduce from the current rate of 28% to a new rate of 24%.

Furnished Holiday Lets: Tax scheme to be abolished

There are currently special tax rules for short-term rental accommodation which qualifies as a Furnished Holiday Let (FHL), but the Spring Budget 2024 announced this scheme will be abolished from 6th April 2025.

The changes mean some types of tax reliefs and allowances previously available will no longer apply, so this type of property will be treated the same as a long-term let.

Multiple Dwellings Relief (MDR): Changes to Stamp Duty Land Tax in England

Multiple Dwellings Relief (MDR) was introduced to help reduce the rate of Stamp Duty Land Tax (payable in England) when purchasing multiple properties in one go. The Spring Budget 2024 announced that Multiple Dwellings Relief (MDR) will be abolished from 1st June 2024.

Ongoing transactions where contracts were exchanged on or before 6th March 2024 will continue to benefit though, as will any purchases which complete before 1st June 2024.

Businesses must register for VAT once their taxable turnover reaches the registration threshold in a 12-month period. The threshold will increase from £85,000 to £90,000 from 1st April 2024. Registering for VAT can have a big impact on price-setting and profit margins in a business, so it’s a key change!

The threshold at which a business can apply for VAT deregistration will also be increased – from £83,000 to £88,000.

Learn more about our online accounting services for businesses. Call 020 3355 4047 to chat to the team, and get an instant online quote.