The first Labour budget in 14 years unveiled a raft of changes that will directly affect the small business. Here’s a round-up of everything the small business owner needs to know.
Rachel Reeves had a series of priorities in setting her Autumn Budget for 2024, including restoring economic stability, building new infrastructure, improving employment prospects, and expanding opportunities for SMEs to grow.
Whilst it’s still not certain how far she has got with addressing these priorities, there is no doubt that the Autumn Budget has had a significant impact on the small business.
Here are all the key points you need to know:
Employer’s National Insurance Increase
A rise has been announced to the amount employers must pay in National Insurance (NI) contributions.
From April 2025, employers must pay 15% in National Insurance on every employee, which is a rise of 1.2%.
There has also been a reduction in the threshold for when this is payable by employers, dropping from £9,100 to £5,000.
However, to help support smaller businesses with this increase, there was a rise announced in the Employment Allowance, meaning employers can claim back more from their NI bill. Where before it was £5,000, now it is £10,500.
Capital Gains Tax Increase
Capital Gains Tax thresholds will increase from 2025. The lower rate will rise from 10% to 18%, and the higher rate from 20% to 24%.
Small businesses currently have access to Business Asset Disposal Relief, which has stayed in place with the available relief remaining at 10% this year, rising to 14% in April 2025, and 18% in 2026/27.
Business Rates Relief Remains Intact
In an attempt to help high street businesses, the Chancellor has announced permanent lower business tax rates for retail, hospitality and leisure businesses.
The existing 75% discount to business rates is scheduled to expire in April 2025, and will be replaced by a permanent discount of 40%, up to a maximum of £110,000 per business.
Corporation Tax Capped
It was confirmed that the Corporation Tax higher rate would be capped at 25% for the duration of this parliament.
Other Key Points for Small Businesses
Other announcements in the Autumn 2024 Budget that may impact the small business include:
- Fuel duty frozen for another year
- From April 2026, the first £1 million of combined business and agricultural assets will not incur Inheritance Tax
- The current rate of R&D Relief will remain in place
Autumn Budget 2024 – key action points for small businesses
Some of the announcements made in the Autumn 2024 Budget may impact some small businesses more than others.
Here are a few things you could potentially do to help get you through the challenges brought about by the changes:
Take time to understand how you’ll be affected by the Autumn Budget announcements
Take time to absorb the news, and how it might affect your business specifically. Whilst some of the announcements may appear worrying, in certain cases they may not directly affect you. For example, the National Insurance changes may not impact your business if you have fewer than five members of full time staff on the National Living Wage, as you won’t be paying any Employer’s NI Contributions.
Take advantage of any available reliefs NOW
As Research & Development Relief will remain in place, you may consider allocating resources to innovate your services or product lines. This could assist in improving your competitive edge and possibly even introduce new opportunities.
Additionally, gf you are considering disposing of business assets, you may be well advised to act sooner rather than later, with Business Asset Disposal Relief remaining at 10% until April 2025 before its increase to 14%.
Always take specialist advice before making any decisions of this nature to ensure you are making the right moves to suit your individual circumstances and goals.
Prepare for the new Business Rates
With the new permanent Business Rates discount of 40% on its way in to replace the current temporary 75% discount next year, now is the time to take a good look at your financial plans.
It may be wise to adjust your budgets and think about price increases where required to offset the changes.
Take professional advice
If you’re uncertain as to how the Autumn Budget announcements may affect you, talk to an accountant or bookkeeper. They will provide you with tailored advice on how you will be specifically impacted by the changes coming in, so that you can see the clearer picture without the hype and hearsay.
How will the Autumn 2024 Budget affect your business?
If you would like advice about what the Autumn Budget 2024 means for your individual business, or for queries relating to company or self-employed taxation, please get in touch with us at Office Assistants. We are always happy to help!
