Whats in store the key issues
The Budget 2024
The Chancellors 2024 budget speech.
if the polls are to be believed it may be the last one from a Tory Chancellor for a while. A budget this close to an election is always set to be politically charged but I have done my best to pick thorugh the Chancellor’s statement and identify the key issues for small business owners.
The headline is the 2% cut to employees national insurance. This mainly effects employees, however it has interesting implications for owner manages or limited companies who also receive a directors salary.
With the increases in company tax, it may now make sense to increase a directors salary to reduce corporation tax, especially your business is paying corporate taxes at a marginal rate of 26.5% and you are swapping out directors remuneration in dividends for salary. You will obviously need a good tax advisor who knows your personal circumstances to ensure this is right for you.
Generally speaking no mention was given to the other tax bands and allowances increasing with inflation and this means fiscal drag will continue to be an issue bringing more and more people into higher rates of tax.
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Other aspects of the budget relevent to the owners of small businesses were as follows:
- The inflation forecast from the OBR shows inflation falling below 2%. GDP growth was predicted at 0.8% for the year and 1.9% next year.
- Full expensing on business capital assets was re-confirmed and the Treasury is also going to look at this being extended to apply to leased assets in the future.
- The VAT threshold was increased to £90k from 1st April meaning registering for VAT will not be required if your sales in a 12 month period are below this level.
- The furnished holiday lettings regime will be abolished. This will be a blow to those who run a holiday home as a business as the tax regime on residential properties is much less favourable.
- Capital gains tax at the higher rate of 28% on residential property has been reduced to 24%. If you are looking at selling a second home and are a higher rate taxpayer it might be worth holding off on the sale until this comes into force.
- Non-domicile system abolished. The new system will be based on tax residency status instead.
- The alcohol duty freeze was continued, this should be of help to the hospitality industry.
- Fuel duty cut of 5p was maintained which should help those self-employed in the trades who do a lot of driving.
- Child benefit system is to be moved to a household system in the future. The current threshold is to be raised from £50k to £60k.
- In relation to personal taxes there will be the creation of a new ‘British ISA’ with an additional £5,000 investment allowance on top of the usual ISA annual allowance.
- Special tax breaks were also announced for those in the audio-visual and creative industries.
Woods Russell would love to hear what you made of the budget, were there any aspects that were of particular interest to you? As always, if you have any questions about the budget and how it affects you please get in touch with Matthew Russell or one of the Woods Russell team.
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