Business Tax Update Budget 2024 – Introduction
In a significant move to support the growth of UK businesses, the latest budget announcement introduced several business tax changes and incentives designed to foster innovation, investment, and economic development.
Full Expensing Extended to Leased Assets
In a continuation of the government’s commitment to bolster business investment, the Chancellor confirmed plans to extend the full expensing regime to leased assets.
While this extension is contingent upon favourable fiscal conditions, the government intends to publish draft legislation soon.
This expansion aims to bridge the current gap that excludes leased assets from full expensing benefits introduced in the previous Autumn Statement.
VAT Registration Threshold Increase
Addressing a long-standing threshold, the Chancellor announced an increase in the VAT registration limit from £85,000 to £90,000 starting from 1 April 2024.
This adjustment, the first since 2017, aims to alleviate the administrative burden on growing businesses, although the modest increase prompts discussions on its sufficiency after a seven-year freeze.
Boost for Creative Industries and Cultural Sector
Aiming to reinforce the UK’s creative and cultural prowess, the budget introduced enhanced tax relief measures for the creative industries.
Highlights include the introduction of a UK Independent Film Tax Credit and a 5% increase in tax relief for UK visual effects costs under the Audio-Visual Expenditure Credit (AVEC), effective from 1 April 2024 and 1 April 2025, respectively.
Additionally, the cultural sector will benefit from permanently higher rates of tax reliefs for theatres, orchestras, museums, and galleries to sustain world-class productions.
Introduction of British ISA
In a bid to spur investments in UK companies, a new £5,000 tax-free allowance for investment in UK equities was announced.
This allowance complements existing ISA limits, with a government consultation planned to finalise the details.
Consultation on New Securities and Capital Exchange System
The government is exploring the Private Intermittent Securities and Capital Exchange System (PISCES), a novel market designed to facilitate the growth and scaling of private companies.
The consultation aims to assess the potential of PISCES as a platform for companies to engage in employee share plans and share transfers.
Expansion of Investment Zones and Freeports
The budget confirmed the extension of investment zones from five to ten years in Scotland and Wales, aligning with the extension for England announced in the Autumn Statement.
Investment zones aim to catalyse innovation and growth in knowledge-intensive sectors. Similarly, tax reliefs available in freeport sites will also see an extension from five to ten years.
Energy Profits Levy Extension
Aligning with Labour’s tax strategy, the Conservative government announced the extension of the Energy Profits Levy until 31 March 2029.
This temporary windfall tax on oil and gas companies aims to contribute additional revenue in light of the sector’s substantial profits.
Business Tax Update Following UK Budget 2024 – Conclusion
This budget, strategically announced in an election year, primarily targets workers and individuals.
Although several business tax initiatives were outlined, their implementation largely hinges on future consultations and legislative developments.
Notably absent were immediate cuts to income tax, which could potentially emerge in the Conservative general election manifesto or the next Autumn Statement.
The absence of further announcements on tax-advantaged employee share schemes and reforms for Employee Ownership Trusts suggests that these areas may be addressed in the upcoming Tax Administration and Maintenance Day in April.
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