Autumn 2024 Budget: A Business Owner’s Guide

Last week’s Autumn budget, delivered by Chancellor Rachel Reeves, made history as the first budget presented by a woman and the first Labour budget in over a decade.

This budget focused on strengthening the economy and bringing in more investment. Here’s a look at some key changes and what they could mean for small businesses.

National Insurance

One of the biggest changes is the increase in National Insurance (NI) for employers.

Starting in April 2025, employers will pay NI at 15% (up from 13.8%). The threshold, or point at which businesses start paying NI, is dropping from £9,100 to £5,000.

For example, a small business with five employees each earning £25,000 will face an increase in NI contributions from approximately £11,000 to £15,000.

This increase may lead to higher costs for many small businesses, which could affect hiring and salaries.

Employment Allowance

Employment Allowance is a government initiative that enables employers to reduce their NI liability by up to £5,000 for the 2024/25 tax year.

To help smaller businesses with the recent changes, this is being increased from £5,000 to £10,500 in April 2025.

This change means about one million small businesses might not see an increase in NI payments. It’s particularly beneficial for small businesses looking to expand their workforce without incurring significant additional costs.

Corporate tax rates

The corporate tax rates will remain unchanged at 25% for larger businesses and 19% for small businesses for the duration of this Parliament. This stability provides some predictability for small business owners planning their finances.

Capital investments

To encourage investment in new machinery and equipment, the government has confirmed the continuation of full expensing relief for capital purchases. This allows businesses to deduct the full cost of qualifying capital investments from their taxable income in the year they are made.

For small businesses planning to invest in new technology or equipment, this relief can significantly enhance cash flow and encourage reinvestment in operations.

Capital Gains Tax (CGT)

Capital Gains Tax, which is paid on the profit from selling assets, is also going up.

Starting in April 2025, the lower rate will rise from 10% to 18%, and the higher rate will go from 20% to 24%. For business owners planning to sell assets or investors considering UK businesses, these changes could mean paying more in taxes.

Business advisors suggest working closely with tax professionals to find ways to reduce the tax impact and take advantage of any available tax relief.

National minimum wage

From April 2025, the government will raise the minimum wage to £12.21 for workers over 21. Younger workers (18-20) will also see a significant increase in their wages, up 16.3% to £10 an hour.

This change gives workers a pay raise but may increase costs for small businesses, making it more challenging to keep prices low or grow their teams.

Skills and job support

The government is launching Skills England to improve training for workers and strengthen partnerships between businesses and training providers. Additionally, the Get Britain Working plan will spend £240 million to help disabled and long-term sick people return to work.

For small businesses, these programs could mean a more skilled and accessible workforce, making it easier to fill open roles and improve productivity.

Tighter rules for umbrella companies

The budget also included plans to better regulate umbrella companies that often employ temporary workers. Some of these companies have been accused of unfair treatment.

By improving oversight, the government hopes to protect workers’ rights and ensure fair competition.

Business Asset Disposal Relief (BADR)

Changes to Business Asset Disposal Relief (BADR) will affect small business owners and startup founders who plan to sell their companies.

Currently, the tax rate on qualifying sales up to £1 million is 10%, but this will go up to 14% in April 2025 and 18% in 2026-27. This increase could make it more costly to sell a business.

Funding for innovation and green projects

The new National Wealth Fund will invest £70 billion in future-focused industries like green energy, ports, and hydrogen technology. The goal is to make the UK a leader in these areas.

The government also promised to protect £20 billion in research and development (R&D) funding for fields like biotech, medical science, and aerospace. This support may create opportunities for small businesses in tech, healthcare, and engineering by increasing industry growth and opening up new government contracts.

The 2024 Autumn Budget introduces some new costs for small businesses but also aims to improve training, support innovation, and protect workers. Small business owners will need to plan carefully and may benefit from investing in their teams and exploring new growth opportunities. These changes are meant to create a more stable and productive economy while supporting a stronger workforce.

If you’d like more information, you can find the full 2024 Autumn budget here.

Header image: HM Treasury