What could the Spring 2024 Budget mean for businesses?

With a General Election happening this year, possibly as early as May, we are likely to see some vote winning announcements for individuals, potentially including a rumoured reduction in National Insurance Contributions or income tax. But with the Government’s cashflow needs being delicately balanced, does this leave any scope for good news for businesses?

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Jenny Batchelor
Published: 15 Feb 2024 Updated: 15 Feb 2024
Business tax Tax

Incentivising business growth and investment

As already trailed, we have full expensing relief being introduced in April 2024, together with a single R&D tax relief regime. The finer details of these have yet to be announced, and so we could see positive tweaks to either of these to offset some of the pain of the increased corporation tax rate.

We hope that the Chancellor will not do anything further to increase this pain for corporates, as there are already murmurings that the 25% tax rate for large businesses is a step too far for some. Those groups with existing overseas operations and the ability to change their operating structure are starting to consider alternatives.
The current VAT registration threshold of £85,000 has remained the same since 2017, and so it is possible an increase may be considered.

Other VAT measures are likely to be sector specific and focussed on areas popular with voters, such as the entertainment and leisure industries. Pubs, in particular, have been campaigning hard for additional support.

With Government funding due to commence shortly for the previously announced Investment Zones, an initiative designed to support the UK’s growth industries in high potential but underperforming areas, we may see an update on how the scheme is progressing.

Environmental incentives unlikely to be a focus

Unfortunately, as they do not tend to be vote winners, we are likely to have another year without any significant new environmental incentives being announced. However, we could see the UK Carbon Border Adjustment Mechanism (UK CBAM) being announced. This follows the summary of responses to the consultation on addressing carbon leakage risk to support decarbonisation in December 2023. One of the measures included was a UK CBAM, and the Government has confirmed that it will implement a UK CBAM by 2027.

A shifting landscape for international businesses

Larger businesses also have the ongoing implications arising from Pillar 2 and the continued battle to compile and analyse the data for both their accounts and relevant Pillar 2 filings, with the rules coming in to force for periods ending on or after 31 December 2023. With many countries implementing new rules at the same time, and more countries expected to follow, this is an ever-shifting international landscape and we may see proposals for further legislative changes as the global picture develops.

If you would like to read more on what changes are actually announced, we will be publishing our analysis of the Budget on the evening of 6th March and over the following day on our website.

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By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.

Tax legislation

Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. You should always seek appropriate tax advice before making decisions. HMRC Tax Year 2023/24.