The Autumn Budget 2024, delivered by Chancellor Rachel Reeves, is stirring conversations across the UK. With a focus on tax increases and economic reforms, it’s crucial for small business owners to grasp the implications of these changes. In this article, we break down some of the significant aspects of the budget and what they mean for you.

£40 billion tax increase

This year’s budget introduces a significant £40 billion tax hike, primarily affecting businesses and high-income taxpayers. The increase aims to cover rising public spending and investments. For small businesses, this means tighter budgets and a need for strategic planning to mitigate financial impacts.

A major part of this increase comes from sectors such as financial services and tech, which are hit with new levies. 

Changes in National Insurance, Corporate Taxes, and Capital Gains

Small businesses must pay close attention to the shifts in National Insurance, corporate taxes, and capital gains tax rates, which are set to affect both business operations and individual earnings.

• National Insurance sees a heavier burden on employers, yet the increase in the Employment Allowance (from £5k to £10.5k from April 2025) provides some relief. National Insurance Contributions (NIC) for employers will rise from 13.8% to 15%, starting April 2025 and the threshold at which the NIC becomes payable drops to £5000.
• Corporate Tax Rates remain capped at 25%, but changes like the inclusion of the undertaxed profits rule (UTPR) will affect multinational corporations with income over €750 million.
• Capital Gains Tax will now have higher rates, moving from 10% and 20% to 18% and 24%, impacting business asset disposals.

Other key measures

• Living/Minimum Wage both increased, National Living Wage to £12.21 an hour with minimum wage for those aged 18-20 to also increase to £10 an hour. So, if anyone on your team is on the lowest hourly wage for their age, this needs to increase from April 2025.
• Reform of Carried Interest affects investment fund managers, altering how their earnings are taxed. Carried Interest rate is due to increase to 32% in 2025.
• Changes for Non-UK Domiciled Individuals may influence business decisions for international stakeholders operating in the UK.
• Annual Investment Allowance stays at £1m a year, meaning you can continue to buy a significant amount of capital equipment each year and get tax relief in the year of purchase.
• Taxation of Company Cars – the Government has set company car tax rates for 2028/29 and 2029/30, increasing electric vehicle benefit charges by 2% per year to support EV adoption, closing ECOS tax loopholes by 2026, and applying a car benefit charge to double cab pick-ups starting April 2025.
• Inheritance Tax – Inheritance tax thresholds are frozen until 2030, pension death benefits will face inclusion in IHT from 2027, and tax relief on AIM shares is reduced to 20%.

HMRC compliance

The budget’s emphasis on HMRC compliance highlights a need for businesses to closely examine their financial practices. With increased funding for compliance staff, HMRC aims to enhance tax collection efforts, potentially increasing audits and scrutiny. Small businesses should ensure their financial records are precise and up to date to avoid penalties.

Retained fuel duty rates

For businesses reliant on logistics, the retention of current fuel duty rates comes as a relief. By keeping these rates steady, the budget offers a buffer against rising operational costs, benefiting industries with significant transportation needs. This stability helps in cost forecasting and maintaining price competitiveness.

Planning ahead

The Autumn Budget 2024 represents a critical moment for small businesses and individuals to reassess their financial strategies.

Talk to us to ensure you are well-prepared for the changes outlined in the Autumn Budget 2024.