How will the Spring Budget 2024 tax changes impact your business?

How will the Spring Budget 2024 tax changes impact your business?

The Chancellor announced many changes in his Spring Budget, including the introduction of new tax reliefs and reforms that will add to existing allowances and thresholds for SMEs. 

Albeit subdued, these changes will help some SME owners as you navigate the hurdles a changing economic environment can bring. 

Here are the key changes you need to be aware of. 

Rise in the VAT registration threshold 

The VAT registration threshold has been increased from £85,000 to £90,000, meaning over 28,000 will no longer need to register for VAT.  

From 1 April, you will no longer have to register for VAT if your business’s turnover is less than £90,000. 

If your business is one of those impacted, the threshold increase releases unnecessary pressure and bureaucracy, allowing you to pay less tax and ultimately save more money such as costs on compliance and expenses. 

This new measure is meant to cut taxes and help your SME however, as this is the first increase in seven years, the benefits are limited due to the increase in inflation. 

You can adapt to the changes by de-registering for VAT but only if you earn below £88,000. 

The level at which your business can apply for de-registration will increase from £83,000 to £88,000. 

If your business turns over less than £88,000, it is important you de-register for VAT as this will mean you stop paying the rates of VAT.  

You must not charge your customers VAT if your business is not VAT-registered. 

If you do not pay VAT, you may still have to pay these taxes instead: 

  1. Income tax 
  2. National Insurance 
  3. Corporation Tax 
  4. Business rates. 

The advice of an accountant ensures you pay the right tax obligations and obtain tax relief/credit where necessary. 

A reminder for VAT-registered businesses 

If your business does earn more than £90,000, you must register for VAT within 30 days of fulfilling the following conditions: 

  1. Your VAT taxable turnover exceeds the new threshold of £90,000 which takes effect from 1 April 
  2. You expect your VAT taxable turnover to exceed £90,000 in the 30-day period from its start date 
  3. Your business had a taxable turnover over £90,000 over the last 12 months from 1 April. 

If you fail to register on time, you will need to pay what you owe from the date the registration should have been effective. 

You also need to know that HMRC may also penalise you depending on: 

  1. The amount you owe 
  2. How late your registration is 
  3. Other situational factors. 

Creative tax reliefs 

Is your business part of the UK’s creative industry? 

The Chancellor announced your sector will receive a series of new tax reliefs that are worth £1 billion, and these will come into effect from 1 April this year. 

These tax reliefs are designed to allow you to invest in your business, perhaps with a new studio or extra staff to aid production. 

If you are an eligible film studio in England, you will receive a 40 per cent relief from business rates for the next 10 years. 

You will get this relief until 2034, with the tax cut worth approximately £470 million over the next 10 years. 

These reliefs also allow qualifying companies to: 

  1. Increase their amount of allowable expenditure 
  2. Reduce the amount of Corporation Tax their business needs to pay. 

To qualify for creative industry tax reliefs, all films/television programmes/animations/video games must pass a cultural test or qualify through an internationally agreed co-production treaty. 

Formal certification is required to qualify. 

From 1 April, all claims must be accompanied by an additional information form. 

This form allows you to provide the necessary evidence required to support your claim for tax relief. 

You should remember that if you do make a claim for tax relief, you will not receive the full amount of expense back from HMRC – you will just receive tax relief on the amount at the rate of tax that you pay. 

The Spring Budget has brought lots of short-term changes for businesses, so it is crucial you understand how they affect you and what you can do to benefit from them. 

For more information about the Spring Budget and how it will affect your business, please contact the Icebtoday.