Autumn Budget 2024

The UK Autumn Budget 2024 introduced significant changes for small businesses, aiming to balance economic support with fiscal responsibility. 

Key measures include:

National Insurance Contributions (NICs): 

Employer NIC rates will rise from 13.8% to 15% from April 2025, and the threshold for NICs will be reduced from £9,000 to £5,000 per year. To support small businesses with these changes, the government is increasing the Employment Allowance from £5,000 to £10,500, and removing the £100,000 threshold, expanding this to all eligible employers.

Business Rates Relief: 

A 40% permanent discount will replace the temporary 75% discount for retail, hospitality, and leisure sectors, capped at £110,000 per business .Capital Gains Tax (CGT): The basic CGT rate will rise from 10% to 18%, and the higher rate from 20% to 24%. 

For Business Asset Disposal Relief and Investors' Relief, the rate will gradually rise to 14% from April 2025 and match the main lower rate of 18% from April 2026. 

If you are planning to sell business assets, these changes may result in higher tax liabilities. It's advisable to review your asset disposal plans with your financial adviser and consider the timing of any sales to manage the impact of these increased rates.

Income Tax

There will be no changes to Income Tax rates or thresholds. The budget confirmed that the previous government's freeze on Income Tax and National Insurance Contributions will not be extended, and that these personal thresholds will be uprated in line with inflation from April 2028.

This should positively impact the amount of tax that both self-employed small business owners and employees are liable to pay when it comes into effect.

National Living Wage: 

• The minimum wage for workers over 21 will increase to £12.21 per hour in April 2025, which may raise payroll costs. 
• The National Minimum Wage rate for employees aged 18-20 will increase to £10.00.
• The National Minimum Wage rate for employees aged 16-17 will increase to £7.55.
• The National Minimum Wage rate for apprentices will increase to £7.55.

Other Tax and Cost Measures:

• Corporation tax remains capped at 25%.
• Fuel duty is frozen for another year, benefiting transport-reliant businesses.
• Research and Development (R&D) relief remains unchanged, encouraging innovation .

While rising payroll and tax costs present challenges, measures like the Employment Allowance and business rates relief offer significant support. Small businesses are advised to plan proactively, particularly for payroll adjustments and asset sales.

HM Treasury Autumn Budget 2024