Yesterday, Chancellor Jeremy Hunt delivered his ‘Budget for Long Term Growth’. His speech promised ‘more investment, more jobs, better public services and lower taxes’ but what did Elsby Co-Founder & Partner really make of it?
A view from the Boss
The main budget announcement is the 2% drop in National Insurance for employees and the self employed. Reaction to this seems to be very muted, across all parties, with the question being asked whether this is properly funded, when public services clearly need investment. Whatever your views on this, my job is to assess the impact for clients. This changes the assessment of whether small businesses, for example, should trade through a limited company or as sole traders or partnerships. Companies can now pay corporation tax up to 25%, with extra dividend tax of 8.75% on the remaining 75% of profits, when distributed to the owners, meaning that the overall tax rate can be 31.5% for basic rate taxpayers. This compares with 26% for unincorporated businesses. There is much more to it – variances on the tax situation depending on circumstances, and possible benefits in a company environment where funds can be retained in the company. This is something our staff will be assessing for you in due course.
There is good news for Child Benefit recipients – the thresholds have been raised, and from 2026, they will be based on household income – this should resolve an anomaly where a family with one main earner can be penalised.
On property, good and bad news: the higher rate of CGT on Buy to Let properties comes down from 28% to 24%, but if you own a furnished holiday let, the tax benefits are being withdrawn from 2025.
One final comment on VAT – the registration threshold has remained the same for a few years now, which in inflationary times, brings more businesses into the VAT regime. The threshold is being raised by £5000, and although described in the press as insignificant, it is better than it remaining static.
I read a comment in the press, from a member of the public, saying “There was nothing earth shattering in that.” I’m not being funny but is there ever? The most notable aspect is that the Tories intend to abolish NI completely as it is a double tax. I thought it was to fund certain public services – was I mistaken? Completely Nuts!
And that means I win a bet with my son, by ending my Budget commentary with the word “nuts”.
Carl Elsby
Download our full breakdown of the Spring Budget 2024 here – Elsby and Co Spring Budget 2024