Business news 7 March 2024

Budget day reaction and more business news that we thought would interest our members.

James Salmon, Operations Director.

National Insurance cut takes centre stage on Budget day

Chancellor Jeremy Hunt confirmed in his Budget on Wednesday that National Insurance will be cut by 2p from April in a move that will save the average worker £450 and cost £10bn. Reducing NI from 10p to 8p repeated a 2p cut in the Autumn Statement, meaning some 27m workers will be £900 better off overall. Mr Hunt said he wanted to see the tax abolished altogether, describing it as an unfair double taxation on work. “When it is responsible, when it can be achieved without increasing borrowing and when it can be delivered without compromising high quality public services, we will continue to cut National Insurance as we have done today so we truly make work pay.” Other key announcements were the abolition of tax breaks for non-domiciled residents, an increase in the VAT threshold for small businesses and a reduction in the higher rate of capital gains tax. The levy on the profits of energy companies has also been extended by another year to 2029, a move the Chancellor said would raise £1.5bn. Duty on fuel and alcohol has been frozen and around 170,000 families will benefit from a boost to child benefits.

Fiscal drag wipes out NI cuts

The Institute for Fiscal Studies has said that Jeremy Hunt’s cut to National Insurance will not benefit middle-class earners, who will still be paying more tax due to frozen thresholds. Under government policy, income tax thresholds will be held a 2021-22 levels until 2028-29 pulling millions more people into higher tax brackets. The benefit of the Chancellor’s NI cut will only be felt by people earning between £26,000 and £60,000 per year. Above and below these income levels, people will have to pay more tax. Paul Johnson, the IFS director, said: “Come the election, tax revenues will be 3.9% of national income, or around £100bn, higher than at the time of the last election. This remains a parliament of record tax rises.”

OBR: Inflation will fall below 2% this year

The economy will expand by 0.8% this year, 1.9% next year and 2% in 2026, the Office for Budget Responsibility (OBR) has said. This is an improvement on previous forecasts. The OBR also predicted that inflation will fall below 2% this year, from the current level of 4%. The slightly better projections indicate that the economy is on course to leave the recession it slipped into in the second half of last year. The OBR forecasts that underlying debt will continue to rise until 2028 after which it will gradually fall. Finally, despite the cumulative 4p off NICs announced in the budget and the autumn statement, the OBR said taxes as a share of national output would still be at a postwar record at the end of its five-year forecast.

Public expenditure will be flat in real terms

To help meet his fiscal target, the Chancellor confirmed on Wednesday that he would keep the planned increase in day-to-day spending at 1% above inflation every year until 2029. Because some government departments have protected budgets, others may face cuts of up to 2.3% per year as a result. Capital spending is set to be frozen in cash terms meaning that on a per-person basis, spending will be flat in real terms for the rest of the decade.

Hunt to expand investment tax break

The Chancellor has announced plans to extend of the new capital allowances regime to include the leasing of plant and machinery. The move will allow businesses that lease equipment such as machinery and plants to offset the costs against their tax bills. It comes after groups like the Confederation of British Industry, Make UK and the British Chambers of Commerce argued that the existing full expensing policy neglects a considerable number of companies. However, Jeremy Hunt said the policy would only be introduced “when affordable”. Andrew England, tax partner at Menzies said: “This is a crucial form of tax relief for many businesses and so must come into force this year.”

Private debt collectors will chase £4bn unpaid taxes

The Treasury expects to raise £240m in the first year after launching a new tax collection policy. Private sector debt collectors will be enlisted to collect up to £4.3bn in unpaid taxes, as part of a massive budget crackdown spearheaded by HMRC. The plan involves increasing HMRC’s capacity to follow up cases of unpaid bills through phone calls, text messages, and letters. The move is estimated to raise £240m in its first year, with additional funding of £140mn for HMRC. Last year, the Government was owed about £40bn in unpaid income tax and £30bn in unpaid VAT. The crackdown will also target overseas sellers operating on platforms like Amazon to collect revenues. “The rate of return on this kind of activity is stark,” said a Treasury source.

VAT threshold raised for small businesses

The Chancellor has raised the threshold at which businesses have to register for VAT from £85,000 to £90,000. Ahead of the Budget, the Association of Chartered Certified Accountants said the “artificial barrier” had capped profit and productivity for businesses and ultimately slowed the economy. Jeremy Hunt said the move will help small business grow, but critics say he should have gone further. The Federation of Small Businesses welcomed the increase but said it had hoped it would be raised to £100,000. Owen Burn, VAT director at Evelyn Partners, also welcomed the move but said some businesses may still opt to manage turnover to remain under the threshold.

Failure to cut VAT irks hospitality industry

UK Hospitality boss Kate Nicholls has expressed her disappointment that the Chancellor declined to cut VAT in his Budget, a move she asserts would have helped keep prices down and boost growth in the sector. Ms Nicholls said Hunt had “missed a real opportunity to show that he backs hospitality… he had a chance to accelerate and unlock hospitality, but instead he has delivered a cut-and-paste Budget, maintaining the status quo which continues to act as a drag on recovery.”

Retailers disappointed over business rates rise

Retail bosses have criticised Jeremy Hunt’s decision to press ahead with substantial rises in business rates from April. Trade bodies had urged the Chancellor to reduce the planned business rate rise from 6.7% to 2%, but no changes were made in the Budget. The Chief Executive of the British Retail Consortium, Helen Dickinson, said that the rise in rates would cost the retail industry an extra £470m every year. Retailers argue that the rise in rates, coupled with cost pressures throughout the supply chain and the increase in the National Living Wage, will result in higher inflation, lower growth, and fewer jobs. The Chancellor did introduce 40% relief for English film studios, but there was no targeted support for pubs, restaurants, and nightclubs.

Scrapping non-dom rule will raise £2.7bn by 2028

Wealthy non-domiciled residents of the UK will pay an extra £2.7bn by 2028 after the current tax regime was axed by the Chancellor on Wednesday. The tax break allows foreigners who are based in the UK but “domiciled” elsewhere to avoid paying tax on their overseas income. The policy was unashamedly taken from Labour, which had planned to use the cash raised for public services including the NHS, leaving the party facing a choice of dropping plans or finding money elsewhere. The move drew criticism from Tory MP Sir Jacob Rees-Mogg, who said billionaires should be encouraged to come to the country because of the contribution they make to the economy. Industry experts also questioned whether it would deter wealth makers from coming to the UK. Robert Salter, of Blick Rothenberg, said: “It is worth noting that many alternative regimes in other countries provide relief for 10 or 15 years, such as in Italy.” A similar sentiment was expressed by Richard Jameson, of Saffery, who said: “At a time when the UK is seeking growth, the abolition of this regime will add uncertainty and may put off some of those seeking to come to the UK and bring with them long-term investment.” In documents published on Wednesday, the Government said it would be consulting on moving to a “residence-based regime” for inheritance tax, where new arrivals are exempt from the tax for 10 years. The plan also means new arrivals will not be liable for UK tax on non-UK income or gains for the first four years. From year five they will pay the same tax as other UK residents.

Jeremy Hunt extends windfall tax on oil and gas firms

The windfall tax on oil and gas firms has been extended by 12 months in Jeremy Hunt’s Budget despite opposition from the Scottish Conservatives. The 35% surcharge on profits due to high energy prices had been scheduled to end in March 2028. Scottish Conservative leader Douglas Ross warned on Tuesday an extension would harm the energy sector. Industry body Offshore Energies UK has claimed the tax stifles investment and will ultimately cost jobs. “Because the increase in energy prices caused by the Ukraine war is expected to last longer, so too will the sector’s windfall profits – so I will extend the sunset on the Energy Profits Levy for an additional year to 2029, raising £1.5bn,” said Mr Hunt.

Child benefit boost for 170,000 families

Jeremy Hunt extended eligibility for child benefits for around 170,000 families in his Budget on Wednesday. The Government will increase the threshold at which child benefit starts being withdrawn from £50,000 to £60,000. The rate at which it is withdrawn will also be reduced, meaning a parent earning less than £80,000 will still get some money. Overall, the Treasury estimates that 485,000 families will gain an average of £1,260 towards the cost of raising their children in 2024-25. The Chancellor also said he was seeking long-term reform of child benefit which will see it apply to households rather than individuals. Mike Ambery, retirement savings director at Standard Life, part of the Phoenix Group, said: “The tax system is awash with cliff edges and tapers which not only create a great deal of complexity but also disadvantage certain groups of people. Chief among these is the high-income child benefit charge and it’s welcome news that the Chancellor has decided to recognise the unfairness of the current system.”

Chancellor announces tax on vaping products

Jeremy Hunt has announced plans for a tax on vaping products, along with increases in tobacco duty. The nicotine liquids used in electronic vapes will be subject to excise duties for the first time, and tobacco duty will increase to ensure it remains more expensive than vaping.

Capital gains tax on property slashed

The UK Government plans to cut the higher rate of capital gains tax (CGT) on property from 28% to 24% in April 2024. This move is aimed at stimulating the residential property market and encouraging landlords and second homeowners to sell their properties. The lower rate of CGT will remain at 18%. However, second home owners who let their properties out to holiday makers will take a hit. The Government plans to abolish the “Furnished Holiday Lettings” tax regime from April 2025, which will raise £245m per year. This change will bring holiday lets in line with the private rented sector and is expected to raise an estimated £300m for the Treasury. Regarding the cut to CGT, Chris Norris, policy director at the National Residential Landlord Association, said it was “slightly misleading”, arguing that it “will be all but neutralised by the reduction in the annual tax-free allowance.”

Property taxes to rocket 74% in five years

The amount home movers pay in property taxes is set to increase by £9.4bn in the next five years, after Chancellor Jeremy Hunt decided against cutting stamp duty land tax in today’s Spring Budget. The Treasury is predicted to collect £12.7bn in property taxes for the 2023-24 financial year, rising to £22.1bn by 2028-29. The thresholds for stamp duty are also set to change, with the nil-rate band dropping back to £125,000 in April 2025. Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “This Budget could have been an opportunity to present new innovative schemes which help buyers with affordability as well as saving for a deposit – but not even the bare minimum was done. It’s not only incredibly disappointing, it feels like a big mis-step on the Chancellor’s part.”

British ISA gets mixed reaction

The new British ISA announced by the Chancellor in his Budget has provoked mixed reactions from the finance industry. The new ISA allows savers to invest an extra £5,000 tax-free in UK equities, on top of the £20,000 ISA allowance. But Michael Summersgill, chief executive at AJ Bell, described the new ISA as an “ill-conceived, politically motivated decision” that will amount to next to nothing when it comes to additional investment. The policy also contradicts the Government’s already stated goal of simplifying the ISA landscape, says James Carter, head of platform product policy at Fidelity International, who points out that one of the main barriers that deters consumers from investing is complexity. However, Mike O’Shea of Premier Miton Investors said the move was “a crucial step in starting to recapitalise British businesses, and make the UK listing regime the global capital of capital.” Elsewhere, Garry White at Charles Stanley described the launch as “broadly positive” as it could help push more equity ownership by UK residents.

House Prices

UK House Prices showed a 1.7% year-on-year rise in February, slowing from 2.3% in January, according to Halifax. Month on month, the index added 0.4% compared to 1.2% the previous month. The average UK home now costs £291,699, around £1,000 more than last month, per Halifax data.

Nationwide & Virgin Money

Nationwide Building Society has had an all-cash bid for Virgin Money accepted by its rival lender in a move that will make it the UK’s second-largest mortgage provider, leapfrogging Natwest. In a shock move by Britain’s largest mutual, Nationwide will pay 220p per share comprising 218p per share cash plus a 2p dividend in a deal that values Virgin at £2.9 billion, a 38% premium to Wednesdays close. Virgin Money added it had also suspended plans for a £150 million buyback after the offer, which is pitched at a 37% premium to last night’s share price.


Rentokil reported that revenue in 2023 climbed to £5.38 billion from £3.71 billion a year earlier. Pretax profit increased to £493 million from £296 million. On the back of the results, Rentokil recommended a final dividend of 5.93p per share, bringing the total dividend to 8.68p up from 7.55p. Looking ahead, the company expects good underlying trading momentum in 2024. Rentokil also said it plans to launch its “RIGHT WAY 2 Plan” to reinvigorate growth in North America.


Last month was the hottest February ever recorded, and 1.77°C warmer than the preindustrial average for that time of year, data from the EU Copernicus Climate Change Service showed. It was the ninth month in a row in which record temperatures were documented.

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.