Emma Clewes: What can we expect from the Spring Budget?

4 Mar 2024

This week sees an important day in the financial calendar as Chancellor of the Exchequer, Jeremy Hunt, delivers his Spring Budget.

Many commentators are expecting a budget which is even more political than usual, with the impending general election later in the year.

Prime Accountants’ head of tax advisory, Emma Clewes, gives her thoughts on what we can expect when the Chancellor addresses the House of Commons on Wednesday.

Protect the public spend or reduce taxes? This is the debate many people are having ahead of the budget this week.

The IMF have warned that cutting the tax take in the budget would not be fiscally responsible and would add to the UK’s debt while the pressure is on to protect public services and hit net zero.

The question is hard to answer, and some polls have suggested that voters want the government to be sensible rather than make small token changes to tax rates at the expense of public purse.

However, I believe it would be very hard for the government not to make some tax cuts, such as income tax and National Insurance. The personal allowance could be unfrozen, allowing pensioners to escape income tax, and the Child Benefit thresholds may increase from £50,000.

Small business focus

The focus on small business would be expected following the last budget with the VAT registration threshold being a popular suggestion for change.

Stability in business taxes would be welcomed following a period of change, with capital allowances becoming more complex. AIA, full expensing and SBAs all have specific rules and requirements which need to be stepped through carefully.

Maybe we’ll see an extension of full expensing to unincorporated businesses, but these investment reliefs will take time to show a benefit which may materialise under a new government.

Corporation Tax could be reduced, but this would be costly and given the IMF warnings, potentially not sensible. Businesses want R&D relief to stay but it’s an area of turmoil with many businesses deciding not to claim as they are uncertain of the risk. Increases to the minimum wage have a domino effect throughout paygrades, putting an employment tax burden on businesses. Incentives to provide employee benefits such as healthcare might be welcome and could ease the burden on the NHS.

Stamp Taxes have been mentioned and maybe a relaxation for first-time buyers would be welcome. Inheritance Tax (IHT) has come under the spotlight in various discussions but this would need fundamental reform and may not be something the current government changes from a political perspective, although the thresholds would be easy to increase.

Promoting investment may get a look in. Lifetime allowances and ISAs could get some airtime in the speech although with the cost-of-living crisis on our doorstep, many people and businesses are looking to cover daily costs before they can clear funds for savings. With our aging population and mounting national debt, is the public purse big enough to support the elderly of the future?

March 6 may not be a dynamic budget but may give a steer on the political focus of our current government – quick wins or sensible future? Whatever they choose, it’s unlikely there will be fundamental reform.

Get involved

Join us LIVE on LinkedIn on Spring Budget Day (March 6) as our team of experts reflect on Chancellor Jeremy Hunt's financial plans and what they mean for West Midlands businesses.

Together with our colleagues at C&W Chamber of Commerce, we'll examine the budget in detail in a round table led by Prime Accountants director and Chamber president, Steve Harcourt. Sign up via our LinkedIn page