Earlier this month the Chancellor, Jeremy Hunt MP, delivered his Spring Budget, setting out the Government’s tax and spending commitments for the next year. 

Although this is a mixed budget with one eye on a forthcoming general election, there are a few key commitments to highlight.

The FCSA (Freelancer & Contractor Services Association) recently released their summary on the Spring Budget, and for our advice hub, we’ve brought you the key updates and announcements along with our own thoughts.

 

Bishopsgate welcomes the comments on tackling non-compliance in the Umbrella Company Market.

In summer 2024, the Government (if still around) will publish new guidance to support workers and other businesses who use umbrella companies. The Government is also consulting on options to strengthen the regulatory framework in the tax advice market.

There are going to be some changes that have an immediate impact:

⚜ Investment in HMRC Digital Services – The Government will simplify HMRC’s digital services to support Income Tax Self Assessment taxpayers seeking to pay tax in instalments, from September 2025.

⚜ National Insurance Contributions (NICs) rates – The Government will cut the main rate of Class 1 employee NICs from 10% to 8%. This will take effect from 6 April, 2024. The Government will also make a further 2p cut to the main rate of self-employed National Insurance on top of the 1p cut announced at Autumn Statement. This means that from 6 April 2024, the main rate of Class 4 self-employed NICs will now be reduced from 9% to 6%.

⚜ Class 2 National Insurance Contributions (NICs) – At Autumn Statement 2023, the Government announced the removal of the requirement to pay Class 2 NICs from 6 April 2024 and committed to abolishing Class 2 entirely. The Government will consult later in 2024 on how it will deliver Class 2 abolition.

 

Other Key announcements:

 

National Insurance

⚜  The budget’s main ‘vote-winner’ and part of the Government’s commitment to ‘reward working people’ was a cut of the main rate of employee National Insurance Contributions (NICs) from 10% to 8%, which will take effect from 6 April 2024. This is a repeat of the original 2p cut for employee NICs in Hunt’s previous fiscal statement.

⚜  The Government has also reduced self-employed NICs by a further 2p, having cut it by 1p in the Autumn Statement, bringing the rate down to 6%. Like employees NICs, these changes will be implemented from the 6 April 2024.

 

VAT

⚜  Recognising that VAT can be a burden for some small businesses, Hunt’s budget increased the VAT registration threshold to £90,000. The change will take effect from 1 April 2024, and will mean that over 28,000 businesses in 2024-25 will benefit from no longer being VAT registered.

 

To find out more from the FCSA on the latest news, follow this link to their website.

Do you have any questions on this summary? Reach out to the Bishopsgate team, on this, or any other umbrella payroll concerns you might have.