Autumn Budget 2024 - Key Takeaways

The long-awaited Autumn 2024 Budget brought several significant updates for UK businesses, especially around tax measures. Here are the key changes announced:

  1. 1. Employer National Insurance Increase: Starting in April 2025, the employer National Insurance rate will rise by an additional 1.2%, reaching 15%. This increase will elevate employment costs for businesses nationwide and could influence future hiring decisions and prospects for pay rises. Additionally, the threshold before which an employer is responsible for National Insurance Contributions will reduce from £9,100 of qualifying earnings to £5,000. However, the Chancellor has reaffirmed the government’s commitment to supporting the smallest employers, with the Employment Allowance set to increase from £5,000 to £10,500. This adjustment is expected to exempt around 865,000 employers from National Insurance contributions in the coming year.

  2. Business Rates Relief: Retail, hospitality, and leisure businesses will see adjusted business rates relief. The current 75% relief will end, and a reduced 40% relief will apply in 2024/25, capped at £110,000. Additionally, the small business tax multiplier will be frozen, aiming to stabilise tax liability for smaller businesses amid changing economic conditions. However, some industry leaders believe the relief adjustments may still place strain on sectors already facing challenges.

  3. Capital Gains Tax (CGT): The lower CGT rate will increase from 10% to 18%, and the higher rate will rise from 20% to 24%, effective April 2025. This shift is anticipated to generate substantial revenue, with speculation that the rate could eventually align more closely with income tax rates. Many business owners might consider timing disposals before the rate change to mitigate tax impacts on asset sales.

  4. Inheritance Tax (IHT): From April 2026, reforms will apply to Agricultural Property Relief (APR) and Business Property Relief (BPR), capping full relief on the first £1 million in assets. Above this cap, only a 50% relief rate will be available. This change will likely impact family-owned businesses, particularly those with significant agricultural or business assets.

  5. Corporate Tax Roadmap: The budget introduced a long-term Corporate Tax Roadmap, aiming to stabilise corporation tax rates at 25% while retaining the small profits rate of 19%. It also commits to preserving the capital allowances framework, including full expensing for qualifying investments, which aims to incentivise business investment. Importantly, the roadmap emphasises the need for stability within the recently turbulent R&D tax relief scheme, with no new changes announced for the scheme or to the Patent Box regime.

  6. Enterprise Investment Scheme (EIS) & Venture Capital Trust (VCT) Schemes: The government is dedicated to simplifying access to external financial support for start-ups and scale-ups. Notable measures include extending the Enterprise Investment Scheme and Venture Capital Trust schemes until 2035, as well as allocating over £250 million in funding for the British Business Bank’s small business loans programmes in 2025-26. Additionally, efforts will be made to ensure small businesses can benefit from UK Export Finance’s support, with a focus on developing new financial products for small exporters to enhance their access to insurance and finance. The government also plans to publish post-implementation reviews of the Bank Referral Scheme and the Commercial Credit Data Sharing Scheme, with an intention to consult on improvements to these policies to further bolster SME financing options.

  7. Alternative Investment Market (AIM) Shares: In the lead-up to the Autumn Budget, speculation over possible changes to the inheritance tax treatment of shares with Business Property Relief (BPR) created significant uncertainty in London’s AIM market. Investors were concerned that the Chancellor might entirely remove BPR for these shares, which would have dramatically reduced their attractiveness for inheritance tax planning. However, the Chancellor ultimately opted for a 50% inheritance tax relief on qualifying AIM shares, rather than a full abolition. This decision was seen as a partial concession that preserves some tax benefits, providing relief to investors. As a result, the AIM market saw a notable surge following the announcement, reflecting renewed confidence among investors who had been preparing for a potentially more severe tax impact. This decision underlines the government’s intention to support smaller, growth-oriented companies traded on AIM, a market seen as integral to fostering innovation and providing growth capital in the UK.

  8. Minimum Wage Adjustment: The National Living Wage will rise to £12.21 per hour. Combined with increased National Insurance costs, this adjustment could place additional pressures on smaller businesses that need to manage payroll budgets while remaining competitive in the labour market.

As businesses navigate the implications of the Autumn 2024 Budget, it’s essential to understand how these changes might impact your operations and tax strategies. Whether it’s the increased employer National Insurance contributions, shifts in capital gains tax, or adjustments to business rates relief, our expert team is here to help you interpret these developments and optimise your approach. Please do not hesitate to reach out to our expert team to discuss how we can support your business in adapting to these new measures and ensuring compliance while maximising potential benefits.