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April Update: Boosts and Breaks for Businesses Across the UK

April marks the initiation of several key changes affecting businesses across the UK. These alterations encompass a range of areas from tax thresholds to wage rates, with significant implications for small and large enterprises alike.

Firstly, the Value Added Tax (VAT) threshold experiences a modest but notable increase, climbing from £85,000 to £90,000 as of April 1st. This adjustment removes 28,000 small businesses from the VAT system, marking the first such increase since April 2017. While the £5,000 increment may seem limited in scope, it holds significance for many businesses. Moreover, the threshold for de-registration rises from £83,000 to £88,000, offering further flexibility to businesses navigating VAT requirements.

In the realm of research and development (R&D) tax relief, new regulations come into effect, streamlining the process by consolidating the existing SME and large business R&D tax schemes into a unified framework. However, intensive R&D activities now fall under a distinct scheme, reflecting evolving priorities in innovation and development.

Additionally, the freeze on the small business multiplier for business rates continues for the fourth consecutive year. This measure shields over a million ratepayers from a potential 6.6% hike in their bills, forming part of a broader £4.3 billion business rates support package announced during the Autumn Statement. Notably, this package extends a 12-month relief of 75% for 230,000 retail, hospitality, and leisure (RHL) businesses. However, it's important to note that this extension doesn't apply to Wales, where the devolved government has opted for a reduced 40% rates relief.

Furthermore, the national minimum wage undergoes a significant increase, rising to £10.42 from £9.50 starting April 1st, reflecting a substantial 9.7% annual increment. Younger workers and apprentices also benefit from above-inflation raises, with 21 to 22 year olds witnessing a 10.9% surge to £10.18 per hour.

In the realm of taxation, adjustments to the Air Passenger Duty regime impact travelers, with increased rates for long-haul and ultra-long-haul flights, alongside distinctions based on class of travel.

Meanwhile, the energy profits levy (EPL) sees an extension to 2029, aiming to curb excessive profits for energy companies amid ongoing energy crises. This extension maintains the current rate and tax breaks available for the sector, ensuring continued stability.

Large UK businesses face a doubling of the economic crime levy rate, rising from £250,000 to £500,000 for those with annual revenues exceeding £1 billion, as the government seeks to address tax collection shortfalls.

Furthermore, a new 10-year rates relief initiative targets the creative sector, with film studios set to receive 40% relief on gross business rates bills until 2034, fostering growth in the £11.9 billion industry.

Property landlords benefit from a reduced capital gains tax (CGT) rate of 24%, down from the standard 28%, applicable to properties exchanging on or after April 6, 2024. However, the lower rate remains unchanged for residential properties at 18%, alongside existing rates for non-residential properties.

Lastly, the UK Independent Film Tax Credit (IFTC) aims to bolster the production of independent films and support local talent, offering an enhanced credit rate of 53% on qualifying expenditure.

These changes have received positive feedback from small business advocates, recognising the support provided through increased VAT thresholds, frozen business rates, and extended discounts. The 10-year rates relief for film studios further underscores the government's commitment to fostering growth and innovation within the creative sector.

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