STA Update: UK Government Spring Budget 2024 Statement – Headlines for Scottish Tourism and Hospitality Businesses

The UK Government has today, Wednesday 6th March, announced its Spring Budget 2024. The full Spring Budget 2024 document can be accessed here.

The main headlines for Scottish tourism and hospitality businesses are outlined below:

• Office for Budget Responsibility (OBR) forecasts inflation will drop below the Bank of England 2% target in “just a few months’ time”– almost a year ahead of OBR’s forecast at the last Budget.
• The OBR forecasts the economy to grow by 0.8% this year and 1.9% next year – 0.5% higher than the previous OBR statement. The Chancellor said that since 2010 the UK economy has grown faster than the three largest European economies of Germany, France and Italy.
• Barnett Consequentials of around £295 million for Scotland.
• The VAT threshold is to rise from £85,000 to £90,000 to support small businesses.
• Tax breaks for owners of furnished holiday let properties are to be scrapped.
• The alcohol duty freeze will be extended from August 2024 to 1 February 2025. The Chancellor stated: “We value our hospitality industry.”
• The temporary 5p cut in fuel duty will be extended for another 12 months and the planned inflation increase has been cancelled. The Chancellor said this would save average car drivers £50 a year.
• Air passenger duty is to go up for business class, which the UK Government says accounts for high inflation in recent years and will help to maintain the value of APD in real terms. For those in economy on domestic or short-haul flights, rates will remain frozen.
• From 6 April 2024, the main rate of National Insurance contributions is to be cut by 2p from 10% to 8%, and from 9% to 6% for self-employed. The Chancellor said this made NI in the UK lower than any G7 country.
• As part of Levelling-up Funding
• Levelling up culture projects – Dundee will receive funding as part of a UK-wide investment in nationally-significant cultural institutions.
• Expanding the Long-Term Plan for Towns – Peterhead and Arbroath are among 20 towns being given ten years of endowment-style funding and support worth up to £20 million to invest in communities and regeneration.
• Scottish cultural regeneration – The UK Government has announced that to ensure every city in Scotland benefits from levelling up, it will work with Perth and Dunfermline to invest a shared £10 million for cultural investment.
• Investment Zones will be extended from five to ten years in Scotland and Wales. Full details of the four Investment Zones in Scotland and Wales will be announced later this year.
• A ‘British ISA’ will be created as an additional £5,000 tax-free saving allowance for the public to invest exclusively in UK-listed companies.
• To extend the Recovery Loan Scheme as it transitions to becoming the Growth Guarantee Scheme, which the UK Government has said will benefit 11,000 SMEs to access finance.
• 45% tax reliefs for touring and orchestral productions will be made permanent, while non-touring productions will receive 40% relief. The Chancellor cited its benefits for tourism.
• The timetable on the East Coast mainline will be upgraded from December 2024, which the UK Government said delivers on the benefits from £4 billion of investment by providing faster and more frequent services between London and Yorkshire, Newcastle, the North East, and Edinburgh.
• Aimed at getting more people into work, the UK Government is extending the Additional Jobcentre Support pilot across England and Scotland for a further 12 months. As part of the pilot extension, claimants will also be required to accept a new claimant commitment at 6, 13 and 26 weeks, agreeing to more work requirements or have their claim closed.

Other key headlines:

• Oil and gas profits windfall tax extended until 2029.
• Non-Dom tax regime to be scrapped, which the Chancellors estimated would raise £2.4bn a year. Under the new regime, anyone who has been a tax resident in the UK for over four years will pay UK tax on foreign income and gains.
• Increase in tobacco duty and introduction of a vaping tax.
• Full child benefits to be paid to households where highest-earning parent earns up to £60,000, limit is £50,000 currently. Partial child benefit to be paid where highest earner earns up to £80,000.