Introduction
The Autumn 2024 Budget, presented by Chancellor Rachel Reeves, introduces several significant changes that will impact business owners across the UK. With a focus on economic growth and addressing the cost-of-living crisis, the budget includes key measures that business owners need to be aware of. This comprehensive guide will explore the main announcements and their implications for businesses.
1. National Minimum Wage and National Living Wage Increases
From April 2025, the National Minimum Wage for adults over 21 will rise to £12.21 per hour, a 6.7% increase. For 18-20-year-olds, the minimum wage will increase to £10 per hour, and apprentice wages will rise to £7.55 per hour. This increase aims to help workers cope with rising living costs but will also result in higher payroll costs for businesses.
2. Employer National Insurance Contributions
Employer National Insurance Contributions (NICs) will increase by 1.2%, from 13.8% to 15%, starting in April 2025. This change is expected to generate significant revenue for the government but will add to the financial burden on businesses, particularly those with large workforces.
3. Employment Allowance Increase
To offset some of the increased costs, the Employment Allowance will rise from £5,000 to £10,500. This means that 865,000 employers will not pay any National Insurance at all next year, providing some relief for smaller businesses.
4. Business Rates Reform
The budget introduces reforms to business rates, particularly benefiting the retail, hospitality, and leisure sectors. From 2026/27, two new lower business rates will be introduced for these industries. Additionally, the current 75% relief, due to expire in 2025, will be replaced by a 40% relief on business rates for 2025/26, up to a maximum discount of £110,000.
5. Capital Gains Tax Increase
Capital Gains Tax (CGT) rates will increase, with the lower rate rising from 10% to 18% and the higher rate from 20% to 24%. This change will affect business owners looking to sell assets or businesses, potentially leading to higher tax liabilities.
6. Inheritance Tax Reforms
The budget also includes reforms to Inheritance Tax (IHT), particularly affecting Agricultural Property Relief and Business Property Relief. From April 2026, the first £1 million of combined business and agricultural assets will not be subject to IHT, with a 50% relief on assets over £1 million.
7. Corporate Tax Roadmap
The government has outlined a Corporate Tax Roadmap, which includes:
Capping the headline rate of Corporation Tax at 25% for the duration of the parliament.
Retaining the small profits rate at 19% for businesses with profits up to £50,000.
Conclusion
The Autumn 2024 Budget brings several changes that will impact business owners, from increased wages and NICs to reforms in business rates and tax policies. Understanding these changes and planning accordingly can help businesses navigate the new financial landscape effectively. At Lionbridge Wealth Management, we are here to help you understand these changes and develop strategies to manage their impact on your business.
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