Government announces Spring Budget 2024 for March 6th

Spring Budget 2024 is to be delivered on March 6th, the government has announced.

Speaking during the Christmas break, the Treasury said the chancellor would unveil his statement on the first Wednesday of March, “alongside” new forecasts from the OBR.

Earlier than his last spring budget, the March 6th delivery date of Jeremy Hunt’s 2024 fiscal package will firm up speculation that the government is planning a general election in May.

His Autumn Statement in November has already positioned May as a likely election month, by stipulating a 2p NICs cut will boost voters’ take-home pay from January 6th, earlier than the normal April 6th.

'At Spring Budget 2024, don't expect much specifically for IT contractors'

But it is contractors feeling the effects of a corporation tax policy imposed by Mr Hunt’s boss Rishi Sunak that two out of three limited company advisers quizzed yesterday say they want addressed.

“I don't expect much specifically for IT contractors…[in Spring Budget 2024 yet] I’d like to see the two rates of corporation tax taken back to one to encourage the use of limited companies,” Helen Christopher, a chartered accountant, told ContractorUK.

Speaking last night, Christopher added: “While I suspect that this will not happen… [it seems less doubtful] than any major reform of IR35…[because] with an election looming, there will likely be a couple of headline tax cuts.”

'Disappointed, if not offended'

Teodora Dimitrova, the owner of Chart Accountancy is equally hopeful that any politically-motivated tax cuts on March 6th will benefit incorporated business owners, like limited company IT contractors.

“I was disappointed, if not offended, to learn that the promised reduction of the corporation tax rate from 17% had to increase to 25%,” says Dimitrova, alluding to Mr Sunak’s final budget as chancellor.

“This [increase in corporation tax at Budget 2021] was [apparently] necessary for profitable businesses to pay back written-off Bounce Back Loans and furlough claims. How is this fair?”

'Not government's job to create successful small businesses'

In reply to a New Year blog stating the obvious -- that tax cuts “may” extend to small firms on March 6th, a retail expert weighed in that it is “not the role of government to create successful small businesses.”

A business adviser, David Taylor, countered that the UK needs a “radical new look at enterprise support,” as “not only is the current model broken, it has effectively been dismantled – without any form of replacement.”

Taking recently to LinkedIn with a post of his own, accountant Jeffrey Lermer acknowledged that Autumn Statement 2023 by “Clever Jeremy” did prompt limited companies to wonder if paying dividends was “still a no-brainer.”

The same sort of totting up to see if dividends retained their edge had to be carried out after Mr Hunt's Autumn Statement 2022 as well.

'NICs cut won't make much of an impact to PSCs'

But if money matters most, Mr Hunt’s two pence cut to Employee National Insurance in November 2023 (effective from April 6th 2024) “will not make much of an impact” to personal service companies.

The former boss of a contractor accountancy firm, Carolyn Walsh, reflected on her calculation to ContractorUK:

“And while the contractor sector can expect a few moves at the March 6th Spring Budget to woo voters in the upcoming general election…[the current government] can’t realistically promise us too much more.”

A former inspector of taxes, Walsh was part referring to no single party in the last century winning five elections in a row (as Sunak must do to keep his job as PM).

Boss at Oblako Ltd, Walsh was also referring to a basket of measures potentially affecting contractors already being in place, implying that the contract sector may be left alone so the measures can bed in, undisturbed.

'Digital platform operators now sending seller income details to HMRC'

For example since Monday (January 1st), UK digital platform operators such as eBay and Amazon have had to collect, verify, and send to HMRC details about the incomes of their goods and services’ sellers.

Similarly from April 6th 2024, the CGT annual exempt amount reduces by a hefty 50% to £3,000, with consequences for individuals selling shares, property or crypto.

From the same date and similarly effective for the 2024-25 tax year, the tax-free dividend allowance falls to just £500.

'Clownshow'

Also set to be apply from 06.04.24, the IR35 offset will apply albeit for the foreseeable -- so not for just the new tax year.

Sounding IR35-fatigued, a former tech director for Deutsche Bank reflected online: “I think [the offset] is mostly an attempt to make up for the clownshow that was and is HMRC’s approach to the whole [off-payroll] thing.”

More positively for contracting, a March Budget and a May/June election indicates the ‘parliamentary time’ which so far hasn’t been found to regulate umbrella companies could now materialise.

'Here's hoping on umbrella regulation'

The FCSA’s Deb Murphy shared her concern after Mr Hunt’s last statement -- back in November, well before Spring Budget 2024 got announced on December 27th 2023 for delivery on March 6th 2024.

“If [we get, say,] a Spring Budget in February…and a snap election follows closely behind…it makes you wonder about umbrella regulation [ever] coming to fruition,” Murphy worried at the time. “Here's hoping though.”

Notoriously vocal about the disadvantages of umbrella companies, Labour winning general election 2024 could potentially quicken the progress of measures to govern the brolly sector.

'Current government not known to support PSCs'

But due to the consultation which tables regulation being from the current, Conservative government, a Number 10 run by Sir Keir Starmer will likely prefer to start from scratch with its own proposals.  

“The current government are not known for targeting support at limited company contractors,” says chartered accountant Ms Christopher, when asked yesterday about the likely contents of Spring Budget 2024.  

Christopher continued to ContractorUK: “But perhaps a drop in the basic rate of income tax or an unfreezing of the £12,500 personal ‘tax-free’ allowance [at Spring Budget 2024 could benefit contractors]. Whether or not any measures announced on March 6th actually come into force, however, is likely to be entirely dependent on who wins the next general election.”