Navigating the 2024 Spring Budget: 5 Key Announcements for SMEs

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In what’s widely expected to be a general election year, Jeremy Hunt used his Spring Budget to spotlight an economy recovered enough to afford tax cuts.

Though it had comparatively fewer business-specific measures than previous statements, there were still some banner announcements impacting both the business community generally, and individual industries.

Of course, staying updated is always prudent for decision-making. In the interest of that, today we’ll be running through 5 key announcements that are most significant for SMEs.

Business Announcement 1: Extending Full Expensing to Include Leased Assets

When full expensing was announced in 2023’s Autumn Statement, it was seen as a major win by many in the manufacturing industry. In this Spring Budget, the government promised to move even further – announcing a consultation on extending the scheme to also cover leased assets, not just those bought outright.

As Fhaheen Khan, Senior Economist at Make UK said, “Manufacturers are one of the biggest users of capital allowance, and potentially widening access to leased assets highlights the Government’s commitment to explore new ways to ensure the UK is an attractive location to invest.”

Business Announcement 2: VAT Threshold Changes

As we’ve covered before on our blog, businesses are only compelled to register for VAT if their taxable turnover is above a certain amount (though they can register voluntarily).

Previously, this amount was £85,000. But in his Spring Budget, the Chancellor announced that the threshold would rise to £90,000 from April.

This means more businesses will no longer have to pay VAT. Associated administrative burdens and costs would vanish too – with this time and money then able to be redirected into other areas of the business.

Business Announcement 3: Two Year Extension to the Recovery Loan Scheme

During the pandemic, the Government implemented the Recovery Loan Scheme to aid small businesses amidst the economic challenges. It offers a guarantee of 70% on loans of up to £2 million for companies with turnovers under £45 million.

After previously being extended in 2022, an extra £200 million of funding means it will now run to 2026. This marks a two year-extension, which the government said will help as it transitions to becoming the Growth Guarantee Scheme.

Make UK’s Head of Policy, Faye Skelton, says “By extending the scheme, the Chancellor has extended a welcome olive branch to small businesses in the UK in an act that recognises their strategic importance to the economy. Smaller manufacturing businesses account for the vast majority of the UK manufacturing base and this will provide them with a vital safety net to ensure their long-term viability.”

Business Announcement 4: Funding for AI Upskilling

AI is becoming increasingly important to how businesses function – and in recognition of this, the Budget included £7.4m to go towards a pilot of the PBS AI SME Upskilling Fund. This will help SMEs to better train their employees in AI – a move that will likely be welcomed by manufacturing, where only 12.5% are making digital technology central to their strategies.

There was also a doubling of investment for the Alan Turing Institute (ATI), meaning its total funding is now £100 million.

Sir Jim McDonald, president of the Royal Academy of Engineering, cautioned where the investment is targeted, is as important as the amount: “Continued investment in the UK’s AI sector, including through the Alan Turing Institute, is vital to support the development of emerging technologies and engineering that can help to address complex societal challenges. However, it’s crucial that this continued investment is delivered in a way that unlocks opportunities for innovation, skills development and economic success in all nations and regions across the UK, to ensure that advancements in AI engineering contribute to a more inclusive economy.”

Business Announcement 5: Freeport and Investment Zone Tax Relief

Jeremy Hunt called this budget one for long term growth – and a lot of that was focused in areas outside of London.

As well as the North-East trailblazer devolution deal, and devolution of powers to Buckinghamshire, Warwickshire and Surrey, the Chancellor also announced a change to the date when tax reliefs for Investment Zones and Freeports will be phased out.

These ‘sunset dates’ will be extended – to 30 September 2031 for English freeports and investment zones, and to 30 September 2034 for Scottish green freeports and Welsh freeports.

This will continue to make the areas hosting these freeports and Investment Zones more attractive places for businesses to set up and grow, within a business environment that’s more stable and predictable.

As ever, the economic landscape is evolving as fast as the political one. SMEs navigating this have been presented with challenges and opportunities through the announcements in this budget. How they harness them will undoubtedly impact them as we move into a period of political unknown.

If you want to dive deeper into the Spring Budget and its measures for business, you can read the government’s full document here.

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