April 2024 Budget key points: what do the self-employed think?
“Very thin gruel for SMEs,” that’s how Daniel Wiltshire, an actuary and IFA at Wiltshire Wealth, describes Jeremy Hunt’s offering in the Spring Budget.
“It’s as if the Hollow Men at the Treasury are trying to ostracise the most productive part of our economy. Once the party of enterprise, the Conservatives are now the party of corporate statism. And Jeremy Hunt is the perfect conduit,” says Wiltshire when speaking to the Newspage news agency.
The specific measures for self-employed and freelancers in the latest budget offer some tax relief, but it’s important to note that the full details and potential impact of the budget will be clearer in the coming months and at the polls come the next general election.
Solo self-employed workers like gift shop owner Jenny Blyth, were never expecting any major changes. “As expected, Jeremy Hunt’s Budget was filled with hot air and not a great deal of substance. I was surprised to hear, however, that small business is close to the Chancellor’s heart, which is a novelty if nothing else.”
Once the party of enterprise, the Conservatives are now the party of corporate statism. And Jeremy Hunt is the perfect conduit.
Daniel Wiltshire, Wiltshire Wealth
A cut in corporation tax and a higher threshold for VAT could have been a turning point for the Conservative Party’s reputation within the freelancer and small business community. Such changes would have made a significant difference for many solo self-employed business owners like Tom Bowers, Founder of Hypothesis Media.
“As a one-man band limited company business owner focusing on innovation in the creative sector, I’d really like to have seen a reduction in Corporation Tax,” says Bowers.
He continues, “My income is effectively taxed twice, both when it hits the business account and then when I draw down dividends. For me to even consider voting Tory I needed to see them investing in small businesses who are trying to make a difference for the longer term.”
Which tax cuts have been made and are all welcome?
From April 6th, employees’ National Insurance will be cut by another 2p, from 10% to 8%, which could impact PAYE contractors. The self-employed national insurance will be cut from 8% to 6%. It means an additional £450 a year for the average employee or £350 for the self-employed.
When combined with the autumn reductions, the government said it means 27 million employees will get an average tax cut of £900 a year and 2 million self-employed will get a tax cut averaging £650.
Public services are all but on their knees, the NHS is seriously struggling, yet we’re cutting taxes. This feels very much like a policy designed specifically for votes at the election, but it flies in the face of the reality many of us are seeing from public services.
Chris Steele, founder of myTribe Insurance
However, not all small business owners are welcoming the cut in national insurance contributions. “As a business owner, parent of two school-aged children and son of elderly parents, one of whom has dementia, I don’t understand the logic of a National Insurance cut,” says Chris Steele, founder of myTribe Insurance.
“Public services are all but on their knees, the NHS is seriously struggling, yet we’re cutting taxes. This feels very much like a policy designed specifically for votes at the election, but it flies in the face of the reality many of us are seeing from public services. Of course, I don’t want to pay more in tax, but if that’s what it takes to improve the services we all rely on, then so be it.”
Steele says this despite a £2.5 billion day-to-day NHS funding boost for 2024/25 and £3.4 billion in capital investment over the forecast period for the NHS.
My income is effectively taxed twice, both when it hits the business account and then when I draw down dividends. For me to even consider voting Tory I needed to see them investing in small businesses who are trying to make a difference for the longer term.
Tom Bowers, Founder of Hypothesis Media.
Budget highlights
National Insurance (NICs) cut: A further 2p cut to Class 4 NICs for the self-employed, reducing the main rate from 8% to 6% from April 2024. This, combined with the NICs cut announced at the Autumn Statement, means an average self-employed worker earning £28,000 will save over £650 a year.
Tax cuts for workers: A further 2p cut to Employee NICs, reducing the main rate from 10% to 8% from April 2024. This, combined with the previous cut, means an average worker earning £35,400 will receive a tax cut of over £900 compared to last year.
Public sector investment: £4.2 billion investment in the Public Sector Productivity Plan to improve efficiency and service delivery.
High-Income Child Benefit Charge to be assessed on a household basis by April 2026, and immediate support for working families by increasing the threshold to £60,000 and halving the rate at which Child Benefit is repaid – representing a £1,260 boost on average for around half a million working families.
Support for businesses: £200 million extension of the Growth Guarantee Fund to help small businesses access finance, and an increase in the VAT registration threshold from £85,000 to £90,000, taking 28,000 small businesses out of VAT registration.
Investment in key industries: £1 billion in new tax reliefs for the creative industries, £270 million in automotive and aerospace R&D projects, and a £120 million top-up for the Green Industries Growth Accelerator.
Is there a silver lining?
Mortgage expert Lewis Shaw, tells the Newspage Agency, there just might be, but equally questions the Conservative government’s ability to jumpstart the economy’s growth trajectory:
“The Chancellor expects the public to believe they’re competent at running the economy. What bubble do these people live in? You only need to walk down a high street to see that all this talk of a growing economy is bovine excrement. If they think a 2p cut in national insurance can bribe the public, they’re in for a rude awakening.”
He concludes, “However, every cloud has a silver lining; at least we can get pissed at a slightly lower cost than it would have been and drown our sorrows after such a lacklustre budget and a knackered economy.”
