Last week, the Chancellor announced new fiscal measures in the Government’s Spring Budget. From increasing the VAT threshold to the expansion of Investment Zones, here’s what the Budget means for beauty
On Wednesday, Jeremy Hunt made his Spring Budget 2024 speech in what is expected to be the last one before the next general election. But, how will the Budget affect beauty?
Ahead of his announcement, the British Beauty Council made various recommendations to the Government on measures to support our industry. Here’s the key announcements that affect the beauty sector.
Increased VAT threshold for small businesses
The Government has recognised that VAT can be a burden for some small businesses and has committed to increasing the VAT registration threshold from £85,000 to £90,000 from 1 April 2024.
This follows cross-sector calls for the Treasury to cut rate of VAT for the hair and beauty services sector which has prevented growth. This new measure will allow businesses to reinvest savings.
Reversal of High Net-Worth Individual eligibilityÂ
At the end of last year, the Government increased the threshold for high net-worth individuals from £100,000 to £170,000 which significantly reduced the pool of potential angel investors for the beauty industry.
Following engagement from the Council and other industry groups, the Government has committed to reinstating the previous eligibility criteria enabling more beauty funding opportunities – a much needed pipeline of growth.
Expansion of Investment Zones
The Government committed to expanding its Investment Zones programme which originally launched at Spring Budget 2023.
As part of this initiative, specific areas across the UK will receive tax reliefs and increased investment into research and innovation, and infrastructure. All of these areas are important for developing beauty manufacturing across Britain, a key source of creativity and innovation in beauty.
Commitment to review VAT Retail Export Scheme
The British Beauty Council continues to support the cross-industry call for the introduction of an internationally competitive, tax-free shopping scheme for international visitors.
Within the Treasury’s full Spring Budget document, it recognised the calls for a VAT Retail Export Scheme and committed to consider evidence and report back in due course.
Cuts in National Insurance Contributions
The Government has committed to implementing a further Employee National Insurance tax cut from 10% to 8% and a further 2% for the self-employed. This should see the average employee saving around £900 per year and the self-employed saving around £650.
Extension of the Recovery Loan Scheme
The Government has committed to extending the Recovery Loan Scheme to support SMEs to access the finance they need. Soon to be renamed the ‘Growth Guarantee Scheme’, this initiative was established to succeed the loan guarantee scheme set up to help businesses during and in the aftermath of COVID-19.
Introduction of a new UK ISA
This new savings initiative will support savers and open up UK retail investment opportunities for individuals. The UK ISA will be a £5,000 allowance in addition to the existing ISA allowance and will be a new tax-free product for people to invest in UK-focused assets.
The Government is be consulting on the details, however, this could have potentially promising opportunities for the beauty industry.
You can read the Government’s full report here.
