Autumn Budget 2024

4th November 2024

What the Autumn Budget 2024 means and how it will affect UK SMEs

Last week, Chancellor Rachel Reeves unveiled the Autumn Budget 2024. The first Labour Budget in 14 years, many of the highlights have already grabbed headlines, including £40bn in tax rises. This Budget was all about tough political choices with a claimed blackhole of £22bn and public services in need of vital support. There were few surprises, with a raft of changes, some of these changes will take immediate effect whilst others will take effect from April 2025 and beyond.

It’s crucial for small business owners to understand its implications for their operations and financial planning. We took a closer look at what the Autumn Budget 2024 key measures announced means for UK businesses;

National Minimum Wage: National Minimum Wage is increasing to £12.21 for adults over 21 from April 2025. For 18-20-year-olds, the minimum wage will go from £8.60 to £10. Meanwhile, apprentice wages will rise from £6.40 to £7.55 per hour. There will also be a move towards a single adult rate which will be phased in over time to bring all workers in line, regardless of their age.
Increase in employers’ National Insurance: Employers’ NI will be increasing by 1.2% to 15% from April 2025, and the threshold decreases at which the NIC becomes payable will fall steeply to £5,000 from £9,100.
Employment Allowance Raise: The Employment Allowance will increase from £5,000 to £10,500. This means that 865,000 employers won’t pay any National Insurance at all next year. This allows small business to employ 4 full-time workers on the National Living Wage without having to make employers National Insurance Contributions.
Business Rates: There will be a 40% relief on business rates for Retail, Leisure and Hospitality businesses in 2025-26, up to a maximum discount of £110,000 per business. This will replace the current discount to business rates. The small business tax multiplier will be frozen next year too.
Business Asset Disposal Relief: This will remain at 10%, rising to 14% in 2025, before increasing again to 18% in 2026. The lifetime limit for Business Asset Disposal Relief will remain at £1 million.
Capital Gains Tax Increase: The lower rate of Capital Gains Tax will increase from 10% to 18% and the higher rate from 20% to 24%.
Capital Allowances: 100% First Year Allowances for qualifying zero emission cars extended to 31 March 2026 for Limited Companies and to 5 April 2026 for Sole Trader and Partnerships.

Fuel Duty: Fuel Duty continues to be frozen for next year while the temporary 5p deduction which is already in effect, will also be extended for another year.

Stamp Duty: Stamp Duty on second homes increases from 3% to 5% from 31 October 2024.

Inheritance Tax: Inheritance Tax threshold of £325,000 initially frozen till 2028 is now extended till April 2030.

HMRC Late Tax Payments: Investment to be increased by the Government in updating and modernising HMRC systems and data to collect tax that is due. From 6 April 2025, interest rate for late tax payments increases from Bank of England base rate plus 2.5% to base rate plus 4%. The purpose of this is to encourage prompt payment of tax liabilities, with a view to ensuring fairness for taxpayers who pay their tax on time. It is a measure which is predicted to raise £6.5mn.

Corporate Tax Roadmap: The Government has set out a Corporate Tax Roadmap outlining plans for Corporation Tax (CT) over the coming years – CT to be kept at 25%. Further information and key features where the government will be exploring change can be found on the Government website: Corporate Tax Roadmap 2024 – GOV.UK

The budget presents both opportunities and challenges, and whilst there were various other announcements made, we have focused on the ultimate impact that the Autumn Budget 2024 will bring to UK SMEs, and much will depend on the specific industry, scale and strategic direction of each business.

For businesses thinking about their own budgets, and growth plans for the years ahead, understanding the right finance options will be key. Whether business owners need to prioritise managing their cashflow, or are gearing up to an upcoming project or a big event in the coming years, early planning is highly recommended.

Here at Independent Business Finance, we listen, discuss and offer vital support and guidance – get in touch with a member of our team today!

For all aspects of Business and Commercial Finance, contact our office: 01204 398816.