Helpbox Update: Autumn Budget 2024 Highlights for Small Businesses

The recent budget announcement by Chancellor Rachel Reeves introduces a series of significant tax adjustments and spending increases, with particular implications for businesses across the UK. Here’s a breakdown of the key points and how they may affect your business:

National Insurance and Business Contributions

• Increased Employer NICs: From April 2025, Employers’ National Insurance contributions will increase by 1.2%, rising from 13.8% to 15%. This change means higher payroll costs for businesses, particularly those with larger workforces.
• Reduced Threshold for Employer NICs: The threshold at which employer contributions begin will drop from £9,100 to £5,000. This change effectively broadens the range of payroll subject to NICs, increasing the tax burden on businesses with employees earning over £5,000 per year.
  • Impact: These adjustments are aimed at generating an estimated £25bn in additional revenue annually. However, they may lead to careful consideration of hiring costs, wage structures, and growth plans for small businesses facing increased payroll expenses.

Capital Gains and Inheritance Tax

• Higher Capital Gains Tax: The government will raise both lower and higher rates of capital gains tax, impacting investment returns and business asset sales. Although the tax on second properties remains unchanged, business owners should consider this change when planning asset sales or disposals.
• Inheritance Tax Reforms: Reforms to Agricultural and Business Asset Reliefs mean that assets exceeding £1 million will be subject to a 20% inheritance tax. Business owners may want to take action early to mitigate the effects of these changes through proactive tax planning.

Minimum Wage Increase

• National Living Wage: The national minimum wage will increase by 6.7%, setting the National Living Wage at £12.21 from April 2025. While this increase supports workers’ earnings, it may place additional financial pressure on businesses, especially those in industries with a high proportion of minimum-wage employees, such as retail, hospitality, and care sectors.

Reliefs for Retail, Hospitality, and Leisure

• Lower Business Rates: A permanent reduction in business rates is scheduled to benefit the retail, hospitality, and leisure sectors beginning in the 2026-27 fiscal year. Additionally, a 40% business rates relief will be implemented immediately, up to a £110,000 cap.
  • Impact: This relief aims to support cash flow and growth in these sectors, providing tax savings and easing financial constraints for affected businesses.

Employment Allowance and VAT on Private Schools

• Increased Employment Allowance: Rising from £5,000 to £10,500, the Employment Allowance will reduce National Insurance Contributions for eligible smaller businesses, fostering growth and reducing payroll costs for many Helpbox clients.
• VAT on Private School Fees: The imposition of VAT on private school fees starting in January 2025 may impact business owners and employees with children in private education, as this measure will increase the cost of private schooling.

Public Investment and Sector Support

• Enhanced Investment: Increased government funding will be directed toward the automotive, aerospace, and life sciences sectors. Businesses within these industries could see new opportunities for grants, funding, and R&D investment to drive growth and innovation.

Summary and Planning Considerations

With the potential for increased payroll, inheritance, and capital gains taxes, strategic planning will be essential for businesses aiming to manage costs effectively. Helpbox remains committed to supporting our clients through these changes, offering guidance to identify tax-saving opportunities and manage expenses efficiently. Please reach out to discuss how we can tailor our services to meet your business’s specific needs in light of this new budget.