What Does the 2024 Spring Budget Mean for Retailers?

The 2024 Spring Budget, unveiled by the government, presents a mixed bag of opportunities and challenges for the retail sector. With a focus on reducing National Insurance contributions, adjusting thresholds for taxation, and freezing duties on fuel and alcohol, the budget aims to stimulate economic activity and support small businesses.

Here’s what the Spring Budget means for retailers:

National Insurance Contribution Cuts

Come April 6, 2024, the government is giving a welcome break to employees by reducing the main rate of National Insurance by 2p, bringing it down from 10% to 8%. 

And it’s not just employees benefiting. For the self-employed, there’s more good news. Adding to the 1p cut announced earlier, the government is slicing an additional 2p from the main rate of self-employed National Insurance. Starting April 6, 2024, this tweak will lower the main rate of Class 4 NICs for the self-employed from 9% to 6%. With the requirement to pay Class 2 also being axed, more money in the pockets of the British workers could mean their willingness to spend is restored.

High Income Child Benefit Charge Threshold

Starting April 2024, the government’s shaking things up with the High Income Child Benefit Charge. They’re raising the threshold from £50,000 to £60,000, which means around 170,000 families won’t have to worry about paying it anymore. Plus, they’re cutting the charge rate in half, so households won’t have to pay back Child Benefit in full until they’re earning £80,000.

These changes are big news for nearly half a million families across the country. On average, they’re looking at an extra £1,260 in their pockets for the 2024-25 fiscal year. This boost could mean more spending power for families, potentially giving a lift to retail businesses.

Fuel Duty Freeze

To support people with the cost of living, the government is maintaining the rates of fuel duty at the current levels for a further 12 months, through extending the temporary 5p cut and cancelling the planned increase in line with inflation for 2024-25, saving the average car driver £50 in 2024-25. 

Alcohol Duty Freeze

The Spring Budget brought welcome news by extending the alcohol duty freeze from 1st August 2024 to 1st February 2025. For the hospitality industry, this will mean that the average pint of beer has 2p less duty than if the government had gone ahead with its planned increase. The freeze is welcomed by the hospitality industry and will support over 38,000 pubs.

Help for SMEs

For SMEs, there is more positive news, with the Spring Budget promising to increase VAT registration threshold. Previously set at £85,000, the new threshold of £90,000 will allow smaller retailers to benefit from lower taxes, giving them the opportunity to invest in their business.

What was missing?

Despite the promise of helping SMEs with the increased VAT registration threshold, the retail industry feels that the wider issue of Business Rates has again been cast aside. The Chief Executive of the British Retail Consortium, Helen Dickinson raised significant concerns against the lack of attention to address Business Rates:

“Government inaction will now cost the retail industry £470mn extra every year in business rates – money that could have been better spent improving our town and city centres, investing in lower prices, and maintaining jobs and commerce all over the UK. How can a whopping 6.7% tax rise in April be justified, when the Chancellor himself is saying inflation is forecast to be nearer 2%.”

Dickinson also shared her frustration with UK retailers paying over £7bn annually in Business Rates, accounting for over 22% of total tax raised. She called the situation ‘disproportionate and destructive’.

Conclusion

The 2024 Spring Budget unveils a range of measures with both positive and concerning implications for the retail sector. The focus on reducing National Insurance contributions and adjusting thresholds for taxation, coupled with freezes on fuel and alcohol duties, aims to stimulate economic activity and bolster support for small businesses.

The reduction in National Insurance rates, benefiting both employees and the self-employed, is anticipated to inject additional spending power into the economy. Similarly, the adjustments to the High Income Child Benefit Charge threshold promise relief for hundreds of thousands of families, potentially amplifying consumer spending.

However, amidst these positive strides, the neglect of substantial reforms addressing Business Rates leaves a sizeable gap in support for the retail industry. Concerns raised by industry leaders underscore the urgent need for action in this area to relieve the burden on retailers and encourage sustainable growth.

As the retail landscape continues to evolve, it remains essential for policymakers to address the pressing challenges facing the sector, ensuring a more equitable and prosperous environment for businesses and consumers alike.

Why choose RMS?

If you’d like to speak to a member of our expert team about what the Spring Budget means for your retail business, then we’d love to hear from you. Simply call us on 0800 138 0050 or get in touch via our website and our knowledgeable team will assist you.

RMS have worked with ambitious businesses since 2004, supplying tailored software solutions and EPoS hardware from the Shetland Islands to the Seychelles. We work with businesses in most retail verticals, contact us and discover how RMS can help you invest wisely in retail technology.