New research by Marktlink suggests that around 33 per cent of UK business owners are unaware of the value of their company – only slightly lower than the European average figure of 40 per cent.  

While you are not alone if this applies to you, you must know what your business is worth.

Why? Let us show you.  

Know your worth 

The value of your business is not just a number, it is a measure of growth and what you have achieved since founding your company.  

For this reason, the total value of your business is an important metric by which growth and future potential can be measured. 

There are many scenarios which might require you to know the exact value of your business or at least understand its market worth, including: 

• Strategic planning – Your business’ value, alongside data, such as revenue, turnover and profit, can help you to make strategic decisions including investments and operational improvements, as well as provide a measure of success for these initiatives.  
• Sales or acquisitions – Most sales of your business will require an accurate valuation to ensure a fair price for both you and the buyer that reflects market rates.  
• Investment opportunities – Similarly to buyers, investors will need to know the value of your business to assess risk and potential return on investment (ROI).  
• Financial reporting – Some financial statements require an accurate valuation of a business, particularly when it has been passed on to another person as part of an inheritance, making a valuation crucial to succession planning.  

Calculating the value of your business 

Put simply, a business’s value is the financial value of everything owned by your business.  

While this may seem straightforward, there are a number of techniques used to calculate the value of a business depending on its sector, its structure, the reason for valuation and the type of assets it possesses.  

These include: 

• Asset valuation – One of the more straightforward forms of valuation, this involves adding up the total value of all assets owned by the company, including tangible assets such as land and intangible assets such as brand reputation.  
• Discounted cash flow – A more complex and sophisticated method, DCF requires accurate cash flow projections as it calculates how much a business may be worth in the future by determining the present value of future cash flows.  
• Market capitalisation – Used for incorporated companies with shareholders, this method multiplies current share price by the total number of outstanding shares, which can provide a useful picture long-term, but may be impacted by market volatility as a one-off calculation.  
• Revenue or earnings multiplier – If your business is new and lacks earnings history for other methods, this model calculates your current revenue and multiplies it by an industry-specific standard, typically between 0.5 and 2.  

Different methods will be suitable for different types of businesses.  

For example, asset valuation may result in a lower price for a business that holds low levels of tangible assets but has significant future growth prospects or ‘goodwill’ attached to its name.  

It is best to seek professional advice when valuing your business to ensure that you have accounted for every asset and that you are applying the method correctly.  

Business valuations can be complex and, as an important benchmark for the growth and success of your business, must be accurate to hold value for investors, buyers and your own strategic decisions.  

To get to know the value of your business and stay prepared for sales, investments and market changes, get in touch with our team today. 

A survey by the Bank of England (BoE) and the Department of Business and Trade has identified a potentially significant challenge facing SMEs on their journey towards growth.  

The survey’s findings indicate that investment is crucial to sustaining growth for SMEs, but that many businesses faced barriers to accessing finance to make sufficient investment in areas, such as research and development, operational improvements and recruitment.  

Most significantly: 

• Half of businesses reported using only internal funds for investment 
• 20 per cent said that they had underinvested 
• 70 per cent preferred slower growth to incurring debt 
• Use of equity finance is very low in SMEs 
• Financial constraints are a key factor in discouraging borrowing 

All of this begs the question – are you struggling to boost growth in your business due to these barriers to investment? 

The key in the lock 

Often, financial investment is the most effective – or only – way to achieve real growth within a business.  

It opens the door to improvements in your product or service, innovations, enhanced marketing efforts and the ability to recruit the right talent for your team.  

However, early-stage businesses or SMEs typically lack the large cash reserves of larger businesses and, therefore, struggle to invest sufficiently using only internal funds – leaving the options of slow growth or external investment.  

The former is the preferred choice of most UK businesses, according to the research, but this does not need to be the case.  

We can advise you on the right forms of external financing for you and help you seek a loan or investment that aligns with your growth strategy and financial plans.  

What options are available? 

External financing for businesses typically comes in two forms – investment or loans.  

Equity finance – funds which do not come from bank loans but rather investment in exchange for a stake in the company – is demonstrably low among SMEs.  

However, innovative new businesses with high growth potential are prime targets for investors, so important that you know what types of investments are open to you and how you might prepare to access them.  

Investment can come in several forms and generally involves an individual or organisation providing funds for your business in exchange for a proportion of profits or a stake in the company.  

Types of investment your business might attract include:  

• Angel investing: Investors provide capital for a business start-up, usually in exchange for a portion of the business profits or partial ownership. Angel investors often contribute not just capital but also advice and business connections.  
• Venture capital: Venture capital firms offer significant amounts of capital to start-ups and high-growth companies with the potential for high returns. In exchange, they usually require equity and significant influence on company decisions.  
• Private equity: Private equity investors provide capital for businesses looking to expand, restructure, or transition ownership. Investments are often in larger, established companies compared to venture capital. This investment is in exchange for shares in the company.  
• Crowdfunding: Through online platforms, businesses can raise small amounts of capital from many individuals. This method offers the advantage of not having to give up equity or repay the investment directly, though some platforms enable equity crowdfunding.  

Preparing to attract investment can be a long process as it requires detailed insights into the value and future potential of your business, but you may also gain long-term partnerships and insights from investors.  

The other major benefit of investment is that you will not be taking on debt – although another person or company may own a stake in your business.  

On the other hand, if you would prefer to retain full control over your business, business loans may be an option.  

Although over two-thirds of business owners would prefer slower growth to debt, responsibly managed loans do not have to be a hamper to growth.  

Taking on some debt with correct management, such as timely repayment and reasonable loan amounts, can help boost your business’s overall creditworthiness and open doors to future financing.  

The key to successfully managing debt for higher growth is to be ambitious but realistic in your strategy and to ensure that you can cover repayments, even in case of slower growth than anticipated.  

Managing funds for investment 

However you choose to bring funds into your business, you must plan to make strategic investments to ensure growth and a return on investment.  

This is the overall goal of investment and carries benefits for: 

• You, allowing you to repay debt or grow your business 
• Investors, who will see a return on their investment 
• Clients or customers, who may benefit from new products or services 

Demonstrating that you can manage and allocate external funding is also beneficial for plans and may make your business more appealing to further investment or additional credit further down the line.  

For advice on accessing external funding for your business and managing your investments, contact a member of our team today. 

There is an inherent degree of risk in any business growth strategy – but keeping this risk to a minimum can help you grow your business without sacrificing your hard work.  

Growing your business hinges on your ability to take calculated risks, whether that be by investing in innovation or by taking on a new member of staff.  

This risk is not a negative thing – in fact, it is indicative of a strong growth strategy.  

However, it is important to understand how risk mitigation fits into your business growth strategy rather than viewing it as an isolated consideration.  

This way, you can grow your business safely and sustainably. Here’s how: 

Diversification 

Expanding your product or service offering can help spread risk across multiple markets, particularly if your market is prone to fluctuations.  

By not relying on a single source of revenue, your business can better withstand variations in the market which might temporarily reduce the value of a product or service.  

Diversification can also include entering new markets or demographics, as well as introducing entirely new products or services, reducing the impact of poor performance in any one area. 

Financial management 

Robust financial management is crucial for growth and risk reduction.  

This includes maintaining a healthy cash flow, setting aside reserves for emergencies, and managing debt responsibly.  

For example, you may take on a business loan to finance growth. This is likely to carry an acceptable level of risk, provided you allocate funds according to genuine need and make timely repayments.  

Regular financial reviews can help you make informed decisions, spot trends, and address issues before they escalate. 

Market research 

Understanding your market is key to successful growth.  

Continuous market research helps you stay ahead of trends, understand your competition, and identify new opportunities.  

It also allows you to make data-driven decisions, reducing the risk of costly mistakes by showing you which risks are, statistically speaking, worth taking. 

Investment in technology 

Technology can streamline operations, improve efficiency, and open new channels for business.  

Investing in the right technology can also help you stay competitive and responsive to changes in the market.  

For example, management software can offer substantial time savings over traditional administration methods with automation and integrations, which streamline repetitive tasks. 

However, it’s important to assess the risks and ensure that any technology investment delivers value by continually monitoring return on investment and identifying bottlenecks.  

Strategic partnerships 

Forming alliances with other businesses can provide mutual benefits, such as access to new markets, shared resources, and enhanced capabilities.  

Partnerships can also help spread risk through these avenues and by, for example, sharing the cost of investment in a new venture.  

It’s important to choose partners wisely and ensure that agreements align with your business goals and values. 

It is also important to seek external advice from experts before making significant decisions within your business, which could carry high levels of risk.  

We can help you identify your growth priorities and make investments and operational improvements in the right places to achieve these goals.  

Contact us today to find out how.  

The Chancellor delivered his 2024 ‘Budget for long-term growth’ in the face of an upcoming general election.

Although the headlines have been dominated by the news that employee National Insurance Contributions will be cut further to eight per cent, Mr Hunt also announced several measures, which changed how certain property taxes will be applied.

Largely impacting owners of second or additional homes and Furnished Holiday Lets, the new measures attempt to balance individual tax cuts and bolster The Treasury in other areas.

Capital Gains Tax

From 6 April 2024, higher-rate taxpayers will be subject to a lower rate of Capital Gains Tax (CGT) on the sale or disposal of second or additional residential properties that they own.

Currently, gains made on the sale of these properties are subject to a special rate of CGT of 28 per cent for those who pay tax at the higher rate (with an income of £50,271 or more).

The Chancellor’s new measure will bring this rate down to 24 per cent, with the basic rate unchanged at 18 per cent.

This policy aims to encourage and incentivise disposals of second homes and buy-to-let properties and enhance the residential property market for homebuyers.

Multiple Dwellings Relief

A key relief for Stamp Duty Land Tax (SDLT) has been abolished in the Spring Budget.

Multiple Dwellings Relief (MDR) will cease on 1 June 2024. This means that anyone purchasing two or more properties in a single or linked transaction will no longer be eligible for SDLT relief on this basis.

The Chancellor said that little benefit has come from MDR under its original goal of reducing barriers to investment in residential and rental properties.

Furnished Holiday Lets tax regime

Following consultations with a number of MPs from key constituencies, the Chancellor outlined the abolition of the Furnished Holiday Lets (FHL) tax regime.

The measure comes as those in holiday hotspots raise concerns over the supply of residential homes in areas such as Devon, Cornwall and the South Coast.

Previously, owners of qualifying properties were eligible to be taxed under special rules that carried significant tax advantages, including:

• Plant and machinery allowances on items of fixtures, furniture, furnishings and equipment, including the Annual Investment Allowance and Full Expensing
• CGT benefits, such as Business Asset Rollover or Disposal Reliefs
• Profits counted as earnings for pension purposes.

From 6 April 2025, the FHL scheme will be abolished, ostensibly saving The Treasury around £245 million per year.

The implications for holiday let owners could be wide-ranging, including making owning a holiday let financially unviable for those without significant reserves to cover additional costs.

In collaboration with a lower level of CGT for higher-rate taxpayers, the Chancellor hopes to encourage early disposals of holiday homes or second properties, thereby enhancing the housing supply in certain areas.

We understand that changes to property taxes can be complex, so we’re always here to offer advice to those who own property or are considering investing.

For expert, tailored advice, please get in contact with us today.

You may have already heard that the Chancellor, Jeremy Hunt, has announced an end to the preferential tax treatment that non-domiciled individuals (non-doms) currently receive.

At the moment, a non-dom – someone living in the UK but domiciled in another country – has two options when it comes to taxation.

They can opt to be taxed on the remittance basis, where they only pay UK taxes on foreign income and gains that are brought into (remitted to) the UK.

They do not need to pay UK tax on their foreign income and gains that are kept outside the UK.

However, once an individual has been resident in the UK for seven out of the previous nine years, they must pay a Remittance Basis Charge (RBC) of £30,000.

If they have been resident for 12 of the previous 14 years, they must pay an RBC of £60,000.

Alternatively, non-doms can choose to be taxed on the arising basis, where they are taxed on their worldwide income and gains, regardless of whether the money is brought into the UK.

They might choose this option if their overall tax payments would be less than having to pay the respective RBCs.

However, the new rules for non-doms change everything.

The Spring Budget 2024 specifically targeted non-doms

The Chancellor targeted non-doms in his Spring Budget speech on 6 March, saying: “We will abolish the current tax system for non-doms, get rid of the dated concept of non-doms and we will replace the non-dom regime with a modern, simpler system from April 2025 based on residency.”

The Government plans to effectively end the current non-dom system in favour of a new residence-based regime.

New residents of the UK will remain as non-doms for the first four years of their residency, after which they will become domiciled and be required to pay UK taxes on their worldwide income.

Before, an individual could remain non-domiciled for 15 years – with careful planning.

This four-year rule only applies if the individual can demonstrate a consecutive period of 10 years as a non-resident of the UK before their arrival.

Crossing over to the next regime

For those individuals currently deemed as non-doms, there will be a transition period to the new scheme.

Non-doms who do not qualify for the new regime will only be required to pay tax on 50 per cent of their foreign income for that year, though this does not extend to profits from the sale of foreign assets.

Additionally, those owning foreign assets will have the option to adjust the base value of these assets to their market value as of April 5, 2019, for any sales occurring after April 6, 2025, meaning tax will only be due on any increase in value from that date.

To encourage the movement of overseas wealth into the UK, a temporary repatriation facility will allow current non-doms to bring pre-April 2025 foreign income and gains into the UK at a reduced tax rate of 12 per cent for the years 2025/26 and 2026/27.

A quick note on changes to Overseas Workday Relief (OWR)

The OWR currently provides a tax advantage for non-doms working in the UK, as it allows them to claim relief on income tax for earnings related to their duties performed overseas.

Starting in April 2025, the Overseas Workday Relief (OWR) framework will also see significant simplification, introducing an accessible four-year scheme for those who qualify.

This development aims to make the UK more attractive to international talent by offering more straightforward tax relief opportunities.

While full details are still pending, it has been confirmed that eligible individuals will benefit from income tax relief on the portion of their salary related to duties performed abroad during the first three years of UK residency.

Moreover, the existing barriers to repatriating these earnings to the UK will be eliminated, further enhancing the appeal of the OWR scheme to overseas professionals.

What should you do now?

If you are currently classified as a UK-based non-dom when it comes to your global taxes, you’ll need to reconsider your strategies.

If you wish to remain in the UK, you will need to work out whether you are eligible for any of the transitionary schemes available and if you will be required to pay full UK taxes once the legislation comes into effect.

You might have to adjust the way you structure your current finances and plan for future liabilities in the years to come.

You will also need to:

• Review and possibly restructure your investments: Analyse your investment portfolio to identify opportunities for tax-efficient structuring under the new rules.
• Explore gifting and Inheritance Tax planning: To mitigate potential tax liabilities, review your gifting strategies and inheritance planning. Transferring wealth to non-domiciled partners or heirs under the current rules might offer tax advantages.
• Reinvestment in UK-based assets: The changes might provide an impetus to reassess your investment focus. Reinvesting in UK-based assets or your business could not only align with the new tax regime but also potentially benefit from certain tax reliefs and incentives for UK investment. Incidentally, the Chancellor announced the addition of the British ISA during his Spring Budget speech, which might allow you to make £5,000 of tax-free investments in British companies.
• Diversify your income sources: Diversifying your income sources, especially by increasing the proportion derived from UK sources or tax-exempt investments, could reduce your overall tax burden under the new regime.
• Re-evaluate your residency status: For some, it might be worth reconsidering your residency status in the UK and moving elsewhere if necessary. This is a complex decision with far-reaching implications, not just for taxes but also for your personal and professional life.

In any case, you should always discuss your tax liabilities with a qualified and experienced tax adviser.

We can help you mitigate your taxes, reduce your liabilities, and save money.

Please do not hesitate to get in touch with one of our team for more information or tailored guidance. 

Following changes to the Working Time Regulations 1998 in January 2024, further amendments are set to come into force on 1 April 2024 relating to leave entitlement for workers on irregular hours.

Upcoming changes will apply to workers on zero-hours or irregular hours contracts, as well as those who are on ‘part-year’ contracts, such as those who work seasonally.

By definition, these are workers whose hours:

• Are laid out in their contract as variable for each pay period
• Only require them to work for part of the year.

For example, a worker on a zero-hours contract is not guaranteed a certain number of hours each pay period, so they come under the scope of the new regulations.

Alternatively, a student worker who is only contracted to work during term time also meets the definition of irregular hours.

What will these changes look like?

These new regulations aim to reduce confusion around the holiday entitlement for workers on irregular hours.

They are also designed to avoid workers accidentally being assigned more or less holiday than allowed by their entitlement.

Irregular hours workers will accrue holiday based on 12.07 per cent of the hours worked within a particular pay period.

This means that entitlement will be calculated in hours instead of days.

Permitted methods of holiday pay

Updates to the Working Time Regulations also provide for two ways of paying holiday pay to workers.

Employers can either:

• Pay for holidays in the pay period in which they are taken
• Use the ‘rolled up’ method, which adds a percentage of total holiday pay onto each pay period

Although not previously allowed, rolling up holiday pay will be permitted from 1 April – but it must follow certain rules.

If the ‘rolled up’ method is used, you must make it clear on a worker’s payslip what proportion of their pay comes from holiday pay. You must also pay it in the period in which the holiday accrues and calculate it based on total earnings during a pay period.

When do these rules apply?

New regulations will come into force on 1 April 2024 – but it is more complex than this.

Workers will be entitled to their new holiday entitlement starting from the next holiday year after 1 April.

For example, if your holiday year runs from 1 April to 31 March, the new regulations will apply straight away.

However, if your holiday year runs from 1 January to 31 December, then new holiday allowances will apply only from 1 January 2025 and for every holiday year following that.

For more payroll advice and support with planning for staff costs, please get in touch with us.

If you are a business owner and work or run your business from home, then you may be entitled to reclaim VAT on certain costs.

In practice, this means that you can reduce the amount of VAT you have to pay on business income against the amount of VAT you have had to pay on services rendered to your business.

What can I claim?

Legislation around VAT claims for business owners recognises that you may incur a range of different costs in the course of running your business.

You can claim some of the cost of working from home as a business owner on plant and machinery and other assets needed for your home office, including:

• A proportional percentage of your utility costs
• Office furniture such as a desk or desk chair
• Certain redecoration costs
• Security costs for sensitive documents
• Office cleaning costs.

You will need to report any home working expenses that you choose to reclaim VAT on through your VAT return.

Is there anything I can’t claim for?

In general, you can claim VAT costs on anything that you use for running your business from home.

However, some costs are more obviously business-related than others. Costs, such as office furnishings, are related to your operations, but what about something like a phone bill?

This is simple if you have a separate work phone. You can claim 100 per cent of this cost. But if you use the same phone for business and leisure, you will need to work out what proportion of usage is business-related.

For example, if your bill is £40 per month and half of the calls and messages you send are for business purposes, you may be able to reclaim VAT on £20 of the total bill.

Remember to keep a record, including VAT receipts or invoices, of how much you have had to pay in relevant VAT costs as you may need to defend your decision to claim for certain items.

You should also consider whether a claim can be considered ‘fair and reasonable’.

For example, you should only claim for a reasonable proportion of costs such as heating or electricity.

One way of working this out could be the percentage of time in the day you spend in your home office, or the percentage of the floor plan it occupies.

With working from home becoming more common, there are likely to be further debates over what constitutes reasonable costs for VAT claims.

We advise that business owners keep an eye on regulations relating to reclaiming VAT and make sure that they keep accurate records in case any claims are challenged.

Contact us for further information or advice.

The initial provisions of the Economic Crime and Corporate Transparency Act 2023 came into effect on 4 March 2024.

These updates mandate that from 5 March 2024, every company must, when submitting their next Confirmation Statement (form CS01):

1. Provide a registered email address for communications – Companies House will utilise this email for correspondence with the company, though it won’t appear on the public record; and
2. Verify that the company’s planned future operations are lawful.

If we are already managing your Confirmation Statement submissions, you can be confident that we will submit your forthcoming statement adhering to these updates.

Should you handle your Confirmation Statement filings independently, note that you will need to include a registered email address and confirm the company’s commitment to lawful activities before you can finalise your submission.

Further measures effective from 4 March 2024 include:

• A ban on using PO Box addresses as a company’s Registered Office address;
• Enhanced authority for querying information submitted to Companies House and demanding supporting evidence;
• More rigorous checks on company names before the registration of new companies;
• A requirement for all companies to affirm their lawful purpose upon formation and to verify that their intended future operations will be lawful with each subsequent Confirmation Statement;
• The option to mark the register when details seem ambiguous or misleading;
• Initiatives to cleanse the register, employing data matching to identify and eliminate incorrect data; and
• The sharing of data with other Government departments and law enforcement bodies.

Companies House changes beyond 4 March

Additional features of the Economic Crime and Corporate Transparency Act 2023, will be introduced in the coming months and beyond, including:

Companies House fee adjustments

You must also brace for a rise in fees from 1 May 2024. Companies House plans to revise its fee structure to accommodate new expenses and ensure the coverage of existing costs.

Identity verification

A key change will be the requirement for individuals involved in setting up, running, owning, or controlling a company to undergo identity verification.

To facilitate this, Companies House will introduce a service allowing you to verify your identity directly with them or through an authorised agent.

Changes to Accounts Filing

In line with the trend towards digitisation, Companies House is moving towards mandatory electronic filing of accounts, highlighting the push towards software usage.

This transition to online filing will occur over two to three years, though the exact timeline remains to be confirmed. Changes to filing options for small company accounts are also planned.

Limited Partnership Reforms

If you operate a limited partnership, prepare for procedural adjustments. Enhancements aimed at boosting transparency and accountability will require limited partnerships to submit information through authorised agents and provide additional details to Companies House.

Enhancing company ownership transparency

To further transparency efforts, you will need to supply additional information about shareholders in registers.

This includes the full names of individuals or corporate entities and their companies and a one-time comprehensive list of shareholders

Additionally, there will be new restrictions on the use of corporate directors, with specific details provided.

We will keep you updated on each new development. However, if you have any enquiries, do not hesitate to contact us.

The introduction of Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is going to create some upheaval within the SME sector.

No doubt, some of you are already using MTD-compliant software to file your taxes or your accountant is doing it for you.

However, if you are yet to make this change, you should be aware that this will soon become the standard for ITSA.

It is best, therefore, to make the necessary changes to your processes now, rather than having to scramble to remain compliant when MTD for ITSA comes in.

What is MTD for ITSA?

Commencing April 2026, MTD for ITSA will mandate landlords and self-employed individuals, including partnerships, with annual business or property income over £50,000 to submit quarterly updates to HM Revenue & Customs (HMRC).

This threshold will extend to those with income over £30,000 from April 2027.

The initiative is part of the Government’s broader strategy to digitise the tax system, aiming to make tax administration more efficient, effective, and easier for taxpayers to get their tax payments right.

Impact on unincorporated businesses

Limited companies are already familiar with digital reporting through the Corporation Tax digitalisation and the Making Tax Digital for VAT regimes but unincorporated businesses, like sole traders and partnerships, will need to readjust the way they file taxes.

Traditionally reliant on annual Self-Assessment tax returns, these businesses must now transition to a digital-first approach, maintaining digital records and submitting income and expense updates to HMRC every quarter.

This move necessitates a re-evaluation of current bookkeeping practices and possibly an investment in new software or training to meet the MTD requirements.

You may need to look into your:

• Software compatibility: One of the first steps is to ensure that your business’s accounting software is MTD-compatible. This software will be crucial in compiling the necessary financial information and facilitating direct communication with HMRC’s systems. Alternatively, you could outsource this to a qualified accountancy professional to avoid the stress and hassle of doing it yourself.
• Record-keeping: Digital record-keeping becomes mandatory under MTD for ITSA. Businesses must ensure that their financial transactions are recorded digitally, providing a real-time, accurate reflection of their financial position.
• Advisory support: Engaging with an accountant or bookkeeper who is well-versed in MTD regulations can provide invaluable guidance. They can assist in software selection, setup, and ensuring that your quarterly updates are accurate and timely.
• Financial planning: With the introduction of quarterly updates, businesses will have a clearer, ongoing view of their tax liabilities. This information can be instrumental in financial planning, helping businesses manage cash flow more effectively and plan for tax payments.

In short, while the impact on unincorporated businesses is likely to be significant, we believe that with proper planning and a proactive approach, this could be beneficial to you and your business.

How to prepare for the transition

Preparation is key to a seamless transition to MTD for ITSA.

You should start by assessing your current systems and processes and identifying any gaps in digital record-keeping and reporting capabilities.

The next step involves selecting suitable MTD-compatible software, considering factors such as functionality, ease of use, and integration with existing systems.

Finally, businesses should consider undertaking training for staff to ensure they are comfortable with the new processes and software.

Alternatively, you could outsource these processes to ensure that your financial information is correct and that you remain compliant with the new legislation.

Again, an accountant can be an invaluable asset when it comes to MTD for ITSA, and we can give you the advice and guidance your business needs to grow and thrive.

For more information, please get in touch with us.

The latest Budget was an important speech for the Chancellor, Jeremy Hunt, and his Government, as he laid out key measures likely to affect his party’s success at the ballot box later this year.

Although a date for the next general election is still yet to be set, this is likely to be the last time that Mr. Hunt will have a chance to introduce significant changes to taxation and funding and so he didn’t hold back.

Before his announcement, it was unclear exactly what direction the Government would take, following caution from several think tanks about the dangers of significant tax cuts.

While the speech began by outlining the ongoing challenges of the cost-of-living crisis and its main driver, inflation, it soon turned to measures that would boost the economy and personal finances – both in the short and longer term.

The raucous noise from both benches only sought to highlight the importance of the measures announced by the Chancellor.

Mr. Hunt went on to declare that this would be a “Budget for long-term growth” and began outlining measures in the following areas:

• Growth outlook and inflation
• Tax relief for businesses
• Funding for enterprise and key projects
• Property tax
• Personal tax
• Closing thoughts

Growth outlook and inflation

Inflation has been a double-edged sword for the Chancellor, both feeding the rising costs experienced by businesses and the general public, while also filling up The Treasury’s coffers through fiscal drag.

When he stepped into the role, the nation was experiencing one of its highest inflation rates in recent history – at more than 11 per cent – the Chancellor was pleased to announce in his speech that things were back on track.

Measures taken by the Bank of England and the Government, as well as improving global economic conditions, mean that the nation is now on target to hit the all-important two per cent in ‘months’, according to Jeremy Hunt.

The growth statistics produced by the Office for Budget Responsibility (OBR) were also more positive than expected following the Autumn Statement.

According to the OBR’s latest report, GDP growth is expected to reach 0.8 per cent – up from 0.7 per cent growth expected in November 2023.

Similarly, forecasts for 2025 and 2026 show growth will increase to 1.9 per cent and 2.2 per cent respectively. These rates are both higher than previous estimates from the Autumn Statement.

While this will be looked at as a step in the right direction, the reality remains that the UK’s long-term growth outlook remains relatively weak.

Tax relief for businesses

Previous Budgets and Statements have seen the introduction of new reliefs and reforms to existing allowances and thresholds for SMEs.

However, this latest speech seemed far more subdued. The headline increase to the VAT registration threshold to £90,000 will help some smaller businesses, but it comes after a seven-year freeze.

This means that this increase, while useful, will be largely wiped out by the impact of inflation during this period.

The newly permanent Full Expensing capital allowance will also be amended to include expenditure on leased assets, “when fiscal conditions allow”. This will create additional opportunities for businesses to reduce their Corporation Tax liabilities in future.

No further changes were announced to the R&D tax relief scheme, but businesses are already preparing for the previously announced merger of the SME and R&D expenditure credit (RDEC) scheme from 1 April this year.

The Chancellor also singled out the UK’s creative industries with a series of new tax reliefs worth £1 billion.

Eligible film studios in England will receive a 40 per cent relief from business rates for the next 10 years.

Additionally, the introduction of a new UK Independent Film Tax Credit is set to take place, alongside an increase in the tax credit rate by five per cent and the elimination of the 80 per cent cap on visual effects costs under the Audio-Visual Expenditure Credit.

Funding for enterprise and key projects

The Chancellor also unveiled a plan to bolster investment in UK firms with the introduction of a new 'British ISA', allowing individuals to invest an additional £5,000 annually in UK equities, beyond the existing ISA limits.

This initiative aims to foster a new generation of retail investors and position the UK as a global innovation hub akin to Silicon Valley.

Hunt also proposes changes to pension fund regulations, requiring disclosures of UK equity investments to promote domestic investment.

Furthermore, the Government will explore ways to simplify the process for individuals to transfer their pension funds when switching jobs.

This strategy includes compelling local authorities and defined contribution pension funds to reveal their investments in UK stocks, highlighting that currently, only four per cent of pension fund assets are invested in UK shares.

Initially outlined in the Advanced Manufacturing Plan in November 2023, the Government pledged to make the UK the premier global location for starting, expanding, and investing in a manufacturing business.

This commitment is being actualised, with the Budget detailing the next stages of implementing the £4.5 billion funding package for these sectors. This funding includes over £2 billion for the automotive industry and £975 million for aerospace, available for five years from 2025.

Property tax

It quickly became apparent during his speech that the Chancellor wanted to tackle key property issues in the UK.

He first announced that the current Furnished Holiday Lettings (FHL) tax regime would be abolished from April 2025 to encourage holiday homeowners to dispose of their properties and discourage future purchases of homes in areas of high demand.

He then went on to confirm plans to adjust Capital Gains Tax (CGT) for second and additional home sales for higher and additional rate taxpayers to bolster the housing market by reducing their CGT rate from 28 per cent to 24 per cent.

The lower rate will continue at 18 per cent for gains within an individual's basic rate band. This move aims to motivate landlords and owners of second homes to sell their properties, thereby increasing availability for various buyers, including first-time homebuyers and is expected to generate additional revenue throughout the forecast period.

Starting 1 June 2024, the Government will eliminate the Multiple Dwellings Relief, which currently provides a discount for bulk purchases under the Stamp Duty Land Tax system.

Personal tax

The individual taxpayer was very much the focus of Mr. Hunt’s speech, and he dedicated a substantial amount of his time to outlining new tax measures that would focus on putting more money into the hands of working families.

However, to fund this, the Chancellor announced that those with broader shoulders would have to bear the expense.

With this preface, he announced that the current non-dom tax rules would be replaced with a new residence-based regime.

The new regime will be implemented from 6 April 2025 and will introduce a transitional process for existing non-doms to move them on to the new system. The Government also plans to shift towards a residence-based system for Inheritance Tax (IHT).

This, and the cushion provided by higher Treasury revenues due to fiscal drag, meant that the Chancellor could once again cut National Insurance Contributions for employees and self-employed workers.

From 6 April 2024, the Government will reduce the primary rate of Class 1 employee National Insurance Contributions (NICs) from 10 per cent to eight per cent.

Additionally, it will implement an extra 2p reduction in the main rate for self-employed National Insurance, adding to the 1p reduction announced in the Autumn Statement.

Consequently, starting from 6 April 2024, the primary rate of Class 4 NICs for self-employed individuals will decrease from nine per cent to six per cent.

Reforms to the High Income Child Benefit Charge will also see the thresholds based on total household income, rather than the highest earner.

Meanwhile, the current £50,000 threshold will increase to £60,000 from April 2024 as taxpayers transition to the new system. The rate of the charge will also be halved so that Child Benefit is not repaid in full until you earn £80,000.

Closing thoughts

The Spring Budget was packed with measures that were focused more on the individual. While the Autumn Statement that preceded it offered more for businesses.

Together, they provide a framework for the upcoming election. While many may accuse the Government of trying to buy votes, many of the measures will help taxpayers with the cost-of-living crisis and support further economic growth.

This also includes further measures to extend the household support fund, freeze alcohol and fuel duty and a one-off adjustment to rates of Air Passenger Duty (APD) on non-economy passengers.

If you take the politics out of the equation (if you can) and look at the measure presented there are plenty of opportunities for businesses and individuals alike to reduce their tax bills and seek out new opportunities.

The next question on most people’s lips will be when the general election shall be called and what will the opposition’s economic measures look like.

For now, however, there are plenty of actions to take away from this Budget in the coming weeks and months.

Link: Spring Budget 2024