Autumn Budget 2024

Where to start - Rather than feel deflated again I’d like everyone to remember we are resilient.

Building and growing a business takes hard work, determination and grit. We build our future, we are responsible for it and how we react to it.

Rachel Reeves vowed to “rebuild Britain” and promised “more pounds in pockets” let's have a look at the round-up of what happened;

National living Wage

• National Living Wage will increase from £11.44 to £12.21 from April 2025. This is a 6.7% increase which is worth £1,400 across a year to an employee

Employer NICs 

• Rate Increase: As of April 2025, employer NICs will jump by 1.2 percentage points to 15%. 
• Threshold Reduction: The NIC threshold is dropping from £9,100 to £5,000, which could bump up hiring costs. 
• Small Business Support: Employment Allowance increases to £10,500 and will now cover all eligible employers, meaning 865,000 businesses can skip NICs in the coming year. 

This means If you have 5 employees on £40k a year then effectively this will make no financial change to you, if you have more employees on a higher amount then the impact will be felt. Hiring past this point will be more expensive.

Capital Gains Tax (CGT) 

• Rate Increases: Lower CGT rate increases to 18% (from 10%), higher rate to 24% (from 20%). 

• Business Asset Disposal Relief (BADR): The allowance stays at £1m but the taxable rate is set to rise gradually to 14% in April 2025, reaching 18% by 2026.

This is the big one- succession planning will be important and if you are thinking of selling, doing so before 5^th April would bring you the lowest tax bill – but that is a tight timeframe to sell a business!

Business Rates

• Permanent Rate Cuts: Business rates for retail, hospitality, and leisure sectors will be cut from 2026-27.
• Small Business Rate Relief: £1.9 billion is allocated for 2025-26, with a 40% cap on rate bills up to £110,000.

Corporate Tax Stability

• Corporation Tax remains capped at 25% for the duration of Parliament, keeping the UK competitive in the G7 for long-term investment confidence.

EV Adoption Incentives

• VED & Company Car Tax Extensions: Zero-emission cars and chargepoints will continue to attract tax benefits, supporting fleet electrification for companies.

Increased Tax on Second Homes

Stamp Duty Surcharge: Rises from 3% to 5% for buy-to-let properties as of October 2024.

Inheritance Tax

Inheritance tax thresholds will be extended for two more years, until 2030. This means the first £325,000 of any estate can still be inherited tax-free until then. After this, it will still be taxed at 40 per cent.

Until now, most businesses would have been exempt from the estate at death meaning they could be passed on Inheritance Tax free. Now, businesses worth over £1m will attract Inheritance Tax at a 50% reduction in rate, meaning they will be taxed at 20%.

The chancellor also announced that inherited pensions will be brought into inheritance tax from April 2027.

This means you will most definitely need to revisit your long-term plans.

So to me, it's very clear Labour doesn’t recognise the “Working person” to be anyone who has a small or medium business or employs people. However, anyone who has their own business knows not to rely on the government for support. I think I speak for most business owners when I say we have learnt to be resilient. Will the budget solve some problems hopefully- the funding in the NHS is certainly needed and welcomed.

Planning and long-term budgeting/forecasts will be your answer within this budget. Yearly costs will go up and how you cover these will need to be thought about. Hiring additional staff will for most medium businesses need to be a thought-through and structured plan (as it always should have been). I’d imagine this will actually have an impact on hiring for most small/medium-sized businesses. Not quite the get more people into work they were hoping for.  

Succession plan and changes in inheritance tax means planning is essential A timely reminder that after being taxed your whole life you can’t even avoid being taxed when you sell or die!

And if you made it this far well done! If you fancy a pint good news Draught Alcohol Duty: Dropped by 1p per pint from February! So maybe head to the pub- you might need it!