The Autumn Budget 2024, presented by Chancellor Rachel Reeves under the new Labour government, introduced a series of changes that will affect small businesses across the UK. The measures aim to boost economic stability, infrastructure investment, and growth across various regions. Here’s a breakdown of the key announcements and how they may impact small business owners. 

 

 

National Insurance Changes

Starting April 2025, the rate for employer National Insurance Contributions will rise from 13.8% to 15%. Additionally, the threshold for NICs (the salary level at which businesses start paying NICs) will be reduced from £9,100 to £5,000 per year. Although this increase will lead to higher payroll expenses, the government has expanded the Employment Allowance to offset these costs. Employment Allowance will now allow eligible businesses to claim £10,500 towards their annual NIC bill, up from £5,000. This measure aims to ease the impact on small businesses with a lower payroll burden, particularly those in sectors where salary growth has remained slow. 

 

 

Capital Gains Tax Increase 

Small business owners contemplating the sale of business assets should also note changes in Capital Gains Tax (CGT). The basic CGT rate will increase from 10% to 18%, and the higher rate from 20% to 24%, beginning in 2025. Business Asset Disposal Relief will remain but at a higher rate; this relief will rise to 14% in April 2025 and 18% by 2026, a modest increase compared to general CGT rates. This means owners can still benefit from a lower rate on qualifying business assets, albeit at a gradually rising rate. 

 

 

Business Rates Support 

In an effort to support high-street small businesses, particularly in retail, hospitality, and leisure, the government announced a permanent business rates discount of 40%, with a cap of £110,000 per business. This permanent relief replaces the temporary 75% discount, which ends in April 2025. Additionally, the small business tax multiplier will be frozen for the upcoming year. For small businesses operating within these sectors, this long-term reduction can provide financial relief and support growth. 

 

 

 

 

Corporation Tax Cap

For the duration of this parliament, corporation tax will be capped at 25%, the lowest rate in the G7, as per Labour’s new Corporate Tax Roadmap. While this cap is higher than historic lows, it offers small business owners certainty around tax planning, knowing that the rate will not increase further. 

 

 

Freeze on Fuel Duty

Fuel duty will remain frozen for another year, which could indirectly benefit small businesses relying on transportation and delivery services. This freeze helps curb cost increases in logistics, a positive change amidst broader inflation pressures. 

 

 

Research and Development (R&D) Relief

The government has maintained the current levels of research and development (R&D) relief, aiming to encourage innovation across sectors. Small businesses with a focus on innovation are encouraged to allocate resources to R&D activities, potentially leveraging this relief to enhance product development or service offerings. 

 

 

Increased Minimum Wage

In April 2025, the National Living Wage for individuals over 21 will rise to £12.21 an hour. While this ensures fairer pay for workers, it could increase wage bills for small businesses. Businesses employing workers at minimum wage levels will need to budget for these increased payroll costs. 

 

 

Tips for Small Businesses 

With these announcements in mind, here are four practical steps small businesses can take to navigate the new budget landscape: 

• Evaluate Payroll Costs: With rising employer NI contributions and an increased minimum wage, it’s essential to review your payroll and assess how these changes impact your finances. Using employment allowance relief where applicable can help mitigate some of these costs. 

• Plan for Capital Gains Tax: If you are considering selling business assets, it may be advantageous to act before the CGT relief rate rises in 2025. Consulting a tax advisor could help you maximise the benefits available under the current rates. 

• Leverage Business Rates Relief: Businesses in retail, hospitality, or leisure should adjust budgets to include the 40% permanent business rate relief from April 2025. If this applies to you, this could be a prime opportunity to invest back into your business with the savings. 

• Explore R&D Opportunities: With R&D relief intact, investing in innovative projects could yield both operational benefits and tax savings. Small businesses in technology, engineering, or product development sectors could especially benefit from this relief to remain competitive. 

 

 

Final Thoughts:

The 2024 Autumn Budget brings a mix of challenges and opportunities for small businesses. Rising contributions and wage increases may raise operational costs, but expanded relief measures like the employment allowance, business rates reduction, and R&D relief offer ways to counterbalance these expenses. By understanding these changes and planning proactively, small business owners can better navigate the budget’s impact and leverage its provisions to support sustainable growth.