Today’s Spring Budget was surprisingly bold. Despite limited fiscal room for manoeuvre, the Chancellor was nonetheless able to fund several welcome tax saving measures for small businesses and workers alike.
Highlights include a further reduction in national insurance cost for employees and the self-employed (at 2p in the pound), and an increase in the threshold for the high-income benefit charge (from £50,000 to £60,000). Additional recovery loan support for smaller businesses was announced, as well as measures to assist hospitality, and pubs in particular, which will be greatly welcome for those operating in this challenging sector. The increase in the VAT registration threshold – from £85,000 to £90,000 – is a positive step, albeit we might have hoped Hunt to have been more adventurous with this.
Of course, not everyone will benefit. Property investors – particularly those owning holiday lets – are expected to see their tax cost increase markedly, as the favourable “furnished holiday let” tax regime is to be abolished (one of many unfavourable tax changes for landlords in recent years). Additionally, non-domiciles will also see their tax rates increase, as the government adopts a radical rethink in tax policy favoured by their opposition.
In all, it was a Budget where the upcoming general election clearly loomed large. Given its potential to be the last financial milestone in 14 years of Conservative government, the Chancellor took every opportunity to celebrate historic government successes. But in spite, or perhaps because of this context, the measures announced in the Spring Budget are expected to be positive for the small and medium sized enterprises that form the backbone of our country’s economy.
Adam Owens, Director of Tax Advisory
