In what is widely expected to have been the last major financial announcement before the General Election, it was perhaps no surprise that the tax changes announced in the 2024 Spring Budget focused on winning the votes of individuals as opposed to focusing on companies.
In fact, other than some tinkering with creative tax reliefs, this Budget was mainly used to signpost the Government’s future intentions around encouraging investment and improving compliance.
Creative tax reliefs
The Chancellor continued his support for the arts by permanently setting the rates at which losses can be surrendered in respect of expenditure qualifying for Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief at 40% for non-touring productions and 45% for touring productions and all orchestra productions. This will allow loss-making companies to surrender their losses and claim a higher tax refund.
Whilst this new “permanent” relief is slightly lower than the current rates of relief available, it is a welcome improvement over the 20%/25% rates of relief that were set to apply from 1 April 2026.
The Government is also keen to encourage British filmmaking and increased the Audit Visual Expenditure Credit from 34% to 39%, aligning it with the rate available for costs incurred on animated films and children’s programmes.
Whilst the above are welcome, it is fair to say that the number of companies to which they apply, and therefore the cost to the Government, will be limited.
The future
Perhaps of greater note were the points that the Government signposted in the Budget as their intentions for the future.
Companies purchasing qualifying plant and machinery can currently claim 100% tax relief against the cost in the year of purchase under “full expensing”.
There are some restrictions to the availability of full expensing, for example, expenditure on assets which are used for the purposes of leasing cannot be included in a full expensing claim.
This means that plant hire companies are currently unable to benefit from the relief.
The Government intends to draft legislation to change this restriction but will only “seek” to enact this when “fiscal conditions allow.”
The Government will also continue its scrutiny of Research and Development (R&D) tax relief claims by establishing an “expert advisory panel” to support the administration of R&D reliefs.
The underlying message from this is that R&D remains on HMRC’s radar, and that the current level of scrutiny of claims is likely to continue for the foreseeable future.
Overall, it was a relatively quiet Budget for companies, and those who had hoped for reductions in the rate of corporation tax and reforms to R&D relief will have been disappointed, however, some stability in the short term will be welcomed by others.
For all the talks of growth, there was very little in this Budget for companies, with all the headlines reserved for individuals, understandably so as we head towards an election.
