Spring Budget 2024 receives mixed reaction

Although Chancellor Jeremy Hunt claimed small businesses were close to his heart during his Spring Budget speech, many of those who represent the UK’s 5.5m SMEs were left distinctly underwhelmed.

They of course welcomed the government’s increase to the VAT registration threshold, from £85,000 to £90,000, which will be introduced on 1 April, as well as the extension of the Recovery Loan Scheme. But many claimed the Budget could have done more to encourage economic growth and address other serious challenges facing UK businesses.

“I will provide £200m of funding to extend the Recovery Loan Scheme, as it transitions to the Growth Guarantee Scheme, helping 11,000 SMEs access the finance they need.

And following representations from the Federation of Small Businesses [and others], I will reduce the administrative and financial impact of VAT by increasing the VAT registration threshold from £85,000 to £90,000 from April 1st – the first increase in seven years. This will bring tens of thousands of businesses out of paying VAT altogether and encourage many more to invest and grow." Chancellor of the Exchequer, Jeremy Hunt.

Federation of Small Businesses Policy Chair, Tina McKenzie, said: "We welcome the VAT threshold increase and cut to self-employed National Insurance contributions. We were also pleased to see commitments to make progress on the HMRC administrative burden and national roll-out of the Business Energy Advice Service, as well as extending the Recovery Loan Scheme. That said, many businesses face serious challenges – not least through rapid hikes in labour and input costs – and many will have understandably hoped [for] more measures that would help ease the tough decisions small employers are having to make day-in day-out."

Dr Roger Barker, Director of Policy at the Institute of Directors, was rather less impressed. He said: "There was little that can be regarded as a game-changer for businesses, which still face the prospect of an economy that’s unlikely to experience meaningful growth for some time. The extension of the Recovery Loan Scheme was welcome; the Chancellor’s commitment to extend full expensing to leasing was also helpful. Although cuts to National Insurance and boosts to child benefit provision may attract some people back into the workforce, the Budget offered little to address the economy’s deep-seated skills gaps. Clearly this was a Budget aimed at rallying political support rather than addressing the UK’s longer-term economic issues. It fell short of delivering a comprehensive plan for sustainable growth and investment."

Spring Budget 2024: more reaction

Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), said: "Following the Autumn Statement, this Budget was always set to deliver less for business, although changes to National Insurance will provide some momentum. However, beyond this there were no major announcements to help shift the dial on conditions for business. The clock is now ticking to the General Election – and this Budget could be the last fiscal event before voters go to the polls. Business confidence is improving, but the coming months will remain challenging for many companies. It is vital that the economy remains front and centre of the campaign to come."

Andy Chamberlain, Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed), said: "It’s positive that the Chancellor has heeded IPSE’s call to raise the VAT registration threshold. This increase, while modest, will alleviate a barrier to the growth of our smallest businesses. And while the cut to National Insurance will be welcomed by the UK’s 4.2m self-employed, any benefit may well be undermined by frozen thresholds and continued inflation."

Alex Henderson, Tax Partner, PwC, said: "An increase in the VAT registration threshold will be welcomed by smaller businesses since, as well as the tax cost, there is also the administration burden, which always falls proportionately more heavily on smaller businesses with limited resources to deal with it."

Tim Sarson, Head of Tax Policy at KPMG UK, said: "We witnessed a Budget that focussed on supporting families and workers ahead of an impending election, but there were few announcements of note for businesses. The extension of full expensing to leasing has been largely anticipated, although the Chancellor’s comment that this would happen when ‘finances allow’ may raise some eyebrows as to timing."

Written by Mark Williams and Fiona Prior