Chancellor of the Exchequer, Jeremy Hunt, presented the Spring Budget to parliament today, 6 March, in which he revealed the UK government’s spending plans for the year ahead.

The focus was ‘a budget for long-term growth’ according to the Chancellor, who pledged ‘more investment, more jobs, better public services and lower taxes’ and noted that ‘business confidence is returning.’

He shared Office for Budget Responsibility statistics, which predict that the UK economy will grow by 0.8% this year and 1.9% next year: higher than previously expected, and forecast that inflation, currently at 4%, will fall below 2% within months.

Here is a summary of measures that will affect employees and self-employed workers:

  • National Insurance contributions cut.

Following the same announcement in his 2023 Autumn Budget Statement, Jeremy Hunt shared that National Insurance contributions will be cut by a further 2%, from 10% to 8% for employees and from 8% to 6% for self-employed workers. Impacting about 27 million people, this means that the average UK earner will have the lowest personal tax rate since 1975, with an additional £450 per year for the average employee and £350 for those that are self-employed.

  • VAT threshold to increase.

In a measure intended to ‘reduce the administrative and financial impact of VAT,’ the Chancellor announced a £5,000 increase to the VAT registration threshold, from £85,000 to £90,000 from 1 April. The first increase in seven years, the hope is that this will encourage growth and help around 28,000 small businesses avoid paying VAT.

  • £200m funding to extend Recovery Loan Scheme.

In a move to help small businesses (something Jeremy Hunt described as ‘close to my own heart’), he detailed that as well as the business rates support presented in the Autumn Budget, £200 million funding will be provided to extend the Recovery Loan Scheme, as it becomes the ‘Growth Guarantee Scheme’. This will run until the end of March 2026, and offers a 70% guarantee on loans to small and medium-sized enterprises (SMEs) of up to £2 million in Great Britain and £1 million in Northern Ireland, helping 11,000 SMEs access finance.

  • Fuel duty freeze extended.

The Chancellor revealed that the ‘temporary’ 5p per litre cut to fuel duty will remain in place for another 12 months until March 2025, and fuel duty will not increase in line with inflation. This will save the average car driver £50 next year, and bring total savings since the introduction of the 5p cut to around £250.

  • Child benefit threshold to increase and free childcare pledge.

Currently, the threshold for the High Income Child Benefit Charge applies to individuals, but a household-based system will be introduced by April 2026. From April 2024, the threshold will increase from £50,000 to £60,000, with 500,00 families predicted to gain almost £1,300. Hunt also confirmed ‘guaranteed rates’ to childcare providers supporting parents of young children accessing up to 30 hours a week of free childcare. This is expected to lead to an extra 60,000 parents entering the workforce over the next four years.

Caroline Larissey HeadshotCaroline Larissey, chief executive of the National Hair & Beauty Federation, comments:

“We’re pleased that the government has answered our call for changes to VAT with the raising of the VAT threshold, taking into account inflation. However, there’s more to do. We welcome further discussions with HM Treasury around future VAT reform to ensure a fairer system and to help level the playing field in the hair and beauty sector, including options for reduced rates and tiered rates around the threshold.

“However, the silence was deafening on support for apprentices. With wages rising in April, few small and micro sector businesses can afford to take on staff and apprentices and grow the sector. We call on the government to support these businesses, largely female entrepreneurs, bolstering the high street and championing wellbeing in the community.”

To read the Spring Budget in full, click here.

By Editor