2024 Autumn Budget
Posted on 1st November 2024
Here are the stand-out business tax points from the 2024 Autumn Budget that as a small business owner you need to know. After months of speculation and leaks relating to the budget, there were a few suprises as Reeves made her speech, with tax increases being the hot topic.
National Insurance increases
National Insurance contributions are set to rise by 1.2 per cent to 15 per cent from April. The level at which employers will begin paying NI for each employee will also be lowered from £9,100 to £5,000. This is combined with an increase in the minimum wage to £12.21 and will give many UK employers some difficult questions to answer in 2025. However, Reeves also announced an increase in the Employment Allowance from £5,000 to £10,500, meaning many employers won't need to pay any National Insurance next year.
Business Rates
The business tax road map brings good news and bad news for the retail, hospitality and leisure sector. The year 2026/27 will see permanent cuts in tax rates for these industries.
However, the business rate relief for RHL is set to be cut from 2025/26. The current rate is set at 75 per cent but will be replaced in 2026 by a 40 per cent relief on bills, up to a maximum discount of £110,000. The small business tax multiplier will also be frozen from next year.
Alcohol Duty will go up for drinks not on draft in line with the retail price index (RPI). Draft beverages duty will cut. Reeves said it was a ‘Penny off a pint in the pub’.
Capital Gains Tax increase Rates of Capital Gains tax are increasing as predicted. The lower rate of CGT will increase frm 10% to 18% and the higher rate from 20% to 24%. This will take effect from 6 April 2025.
Corporation Tax The government has set out a roadmap outlining plans for Corporation Tax over the coming years. The highlights include: Capping the headline rate of Corporation Tax at 25% for the duration of parliament Retaining the small profits rate and marginal relief at current rates and thresholds Maintaining our capital allowances system and R7D reliefs Working with companies on simplification and improving user experience, including HMRC's path forward on digitisation Developing new processes for increasing the tax certainty available in advance for major investments
Business Asset Disposal Relief After concerns that this would be scrapped, the lifetime limit for Business asset Disposal Relief will remain at £1 million.
National Living Wage and National Minimum Wage Large increases were announced immediately before Budget Day and confirmed in the Chancellor’s Speech. From 1 April 2025 the NLW for employees aged 21 and over will increase from £11.44 to £12.21 per hour. Increases to the NMW will also apply to those aged 18 – 20 (from £8.60 to £10.00 per hour) and those aged 16 – 17 and apprentices (from £6.40 to £7.55 per hour). These are the largest increases to rates on record, marking the first steps in the Government’s commitment towards a single adult rate. The accommodation offset rate will also increase (from £9.99 to £10.66 per day / from £69.93 to £74.62 per week).
Taxation of death benefits From 6 April 2027, the majority of death benefits paid from registered pension schemes (whether DB or DC) will form part of the deceased member’s estate for inheritance tax (IHT) purposes. This includes lump sums which are currently outside IHT because they are paid to a beneficiary chosen by trustees using their discretion. The main exception will be a dependant’s scheme pension (i.e. pensions paid to a dependant such as a spouse or child). Schemes will be responsible for reporting and paying any IHT due.
Inheritance tax Changes The Government has announced that from April 2026 Agricultural Property Relief (APR) and Business Property Relief (BPR) rules will be changed so there will be 100% relief on the first £1m of assets and then 50% relief on assets after that, which equates to an effective tax rate of 20%. If you are concerned about how the changes will affect your business, drop us a message.
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