This year’s budget has just recently been announced, which means some financial changes that you as a business owner need to know about. It’s good news for the creative industries as the Spring budget 2024 offers some very welcome tax cuts and investment to support their growth. Not only this but it is extremely pleasing to see the creative industries finally getting the recognition they deserve, with the government directly referencing how vital they are to the UK economy – and the numbers really don’t lie.
The creative sector brings in £125 billion in gross value to the UK and employs 2.4 million people. As leading accounts for creatives, we thought we would break down the main points of the budget to help you understand how it will affect you and your creative business. So without further ado let’s see what the new Spring Budget 2024 has in store.
Tax cuts for creative businesses
With the election looming, it’s no surprise that the budget has come with some nice tax cuts with £1 billion set aside for the creative industries. Which is great news for us as accountants for creatives and even greater news for our clients. The government also plans to help the sector grow by giving it a £50 billion cash injection and creating one million more jobs by 2030.
For film studios, there’s a 40% relief on business rates for the next ten years along with a new independent film tax credit for films with a budget of up to $15 million (which equates to 53% of qualifying expenditure capped at 80%). This is exciting news for all you indie filmmakers out there and for the film industry as a whole. Second only to Hollywood in terms of studio space the UK film industry is a major player for the economy and so we are delighted to see that the government is giving it the support it deserves.
Plus, if you’re working within the visual effects industry, they’re making your financial obligation a little less, well, taxing too, by boosting the tax credit rate by 5% and ditching the 80% cap on visual effects costs.
Tax reliefs for theaters, orchestras, museums and galleries are set to remain at current rates which are 45% for touring and 40% for non-tutoring productions. It was also announced there would be extra funding of 26.4 million for The National Theatre to mark its 60th anniversary.
The 75% business rate relief from the Autumn Statement 2023 will be sticking around for retail, hospitality, and leisure properties such as cinemas and music venues for the next financial year too.
Reduced national insurance contributions
National Insurance contributions have been cut from 10% to 8%. This reduction translates into direct savings for your employees. Starting from 6 April 2024, the main rate of Class 4 National Insurance Contributions (NICs) for the self-employed will also decrease from 9% to 6%. For a self-employed person earning £28,000 a year, this means an annual saving of around £650.
Property
When it comes to property, it’s a bit of a mixed bag. For business owners looking to sell property, there has been a reduction to the higher rate of property capital gains tax from 28% to 24%. This reduction could result in significant tax savings, providing more capital for you to reinvest into your business or back pocket.
But multiple dwellings relief and the furnished holiday lettings regime have been scrapped in the hopes it will increase the availability of long-term rental properties. Stamp duty relief for those buying more than one dwelling has also been given the boot. So for those in the rental property sector this is not great news, as it means you will be paying more in tax.
Fuel duty, vaping liquids and alcohol duty changes
There is a new levy on vaping liquids and an extended freeze on alcohol duty until February 2025. These are sector-specific changes that could affect your business in different ways.
For those in the hospitality, retail, or manufacturing sectors, these changes could impact both consumer demand and your pricing. But for the rest of us it means we won’t have to worry about a price hike to our after-work pint – at least until next year. The government has also announced the continuation of the fuel duty cut of 5p per liter which they estimate will save the average car driver £50 for the year.
Reform of non-dom tax status
The non-dom tax status is to be replaced by a simpler residency-based system by 2025. Which marks a move towards a fairer tax environment. For businesses that rely on international talent or investment, this could signal a shift.
While it aims to generate more revenue for the government, it’s crucial to assess how it might impact any overseas income or capital gains your business benefits from. Preparing for this change is essential, and so it may be worth consulting with a tax specialist like us here at Raedan to help you navigate the new system no sweat.
Looking ahead
The Spring Budget 2024 forecasts a cautious yet optimistic economic outlook, with GDP growth expected to pick up and inflation predicted to fall below the government’s 2% target.
For small business owners, this means planning for the future with a bit more confidence. However, it’s crucial to remain adaptable, as economic forecasts can change. Staying informed and flexible in your business strategy will be key to navigating the upcoming year successfully.
If you would like to find out more you can read the full budget here.
Our final thoughts
The Spring Budget 2024 presents a mix of opportunities and challenges for business owners. It offers some real hope for those in the creative industries in terms of what the future holds. But being sure to understand the changes is what will help position your business for ongoing success. Remember, the secret to making the most of the budget lies in strategic planning and of course seeking professional advice from expert accountants *wink wink*.
So if you are looking for help with your business finances then get in touch. As highly skilled accountants we don’t just crunch the numbers but provide you with a solid financial foundation to help your creative ideas thrive.
