If, like many, you were tuned into the UK government’s autumn budget announcements on Wednesday, then you might have seen some fairly lighthearted banter at PMQ’s with Rishi Sunak urging Keir Starmer to become a ‘Tech Bro’. However, the mood quickly changed once Chancellor of the Exchequer Rachel Reeves took to the podium to deliver her 2024 Budget – the last few weeks have been heavy with speculation and be all accounts, it was looking fairly ominous for business owners. So what exactly did she announce and how will that impact you? We’ve summarised some of the key points below:
1. Increased tax on high-income earners and private assets
As part of the budget, Chancellor Rachel Reeves introduced tax increases that largely impact higher-income earners and wealthy asset holders. Notably, there’s a rise in taxes on Capital Gains Tax which increases from 10% to 18% and 20% to 24% that will take effect from April 2025. The Chancellor has chosen to maintain the lifetime limit for Business Asset Disposal Relief at £1m at 10% until April 2025 when it will then increase to 14% for the 25/26 tax year and increase further to 18% after 6th April 2026.
Other worthy tax points to note are on carried interest and non-domiciled residents and confirmation that VAT will now be applicable to private school fees. This means companies that work closely with high-net-worth clients or provide services in the private education sector might need to adjust their strategies or pricing to account for this increase in operational costs and potential shifts in consumer spending behaviour.
In her statement, Reeves said
“We need to drive growth, promote entrepreneurship and support wealth creation, while raising the revenue required to fund our public services and restore our public finances. This means the UK will still have the lowest capital-gains tax rate of any European G7 economy.”
Source: Reuters
2. Corporate taxation and incentives for green investment
The budget maintains the corporation tax rate at its current level but introduces new incentives for businesses investing in green technology and sustainable practices. Companies investing in environmentally friendly infrastructure, energy efficiency, or low-carbon solutions will benefit from additional tax relief, helping to offset the cost of sustainable development. For businesses already committed to ESG (Environmental, Social, and Governance) goals or those seeking to incorporate sustainability, these incentives offer both financial and reputational advantages, supporting growth in a responsible manner.
Source: Business Green
3. R&D tax relief retained
The government has confirmed that current rates of R&D tax relief will be retained, providing businesses who are investing in innovation and research to continue with that investment.
Nigel Holmes, director of research and development at tax service provider Ryan, said in a statement:
“There’s a small silver lining for business owners who are in the process of claiming research and development tax relief, as their increased employer national insurance contributions will count towards their qualifying costs. This means that the R&D element of staff costs claimed will increase. This extra cost will also form part of the PAYE cap for loss making entities, which will extend the maximum a loss-making company can receive as a cash credit.”
Source: Research Professional News
A further £20B of R&D funding has been committed to by the government, although how this funding will be deployed is yet to be understood.
4. Small businesses rates
Business rate reforms for the retail, hospitality and leisure industries were announced in this week’s Autumn Budget. The fiscal year 2026/27, will see two new lower business rates introduced, finally responding to calls to provide increased support to sectors that were significantly impacted during 2020 and the Covid pandemic.
Further to this, a 40% relief on business rates for 24/25 will replace the current 75% relief, up to a maximum discount of £110,000 and the small business tax multiplier will be frozen next year too.
Source: Small Business
5. New workforce regulations and employer costs
We’ve known for a little while now that there are plenty of employment law changes coming down the line, which see a number of Day One rights for employees being introduced. We’ve written about these before which you can read more about here.
There’s good news for employers who are investing in training their teams in high-demand areas like digital skills, cybersecurity, and renewable energy technology with greater training incentives. However, the Government has avoided increasing taxes for employees, by passing the tax increases to employers instead.
From April 2025, Employers’ National Insurance Contributions will increase by 1.2% to 15%, and the threshold as which Employer NI contributions will decrease from £9,100 to £5,000 which is a huge blow for smaller businesses owners. The silver lining however is that the employment allowance increases from £5k to £10k.
The National Living Wage will increase to £12.21 per hour and young workers aged between 18 – 20 can expect an hourly wage of no less than £10.
Sources: Standard and Guardian
6. Supporting regional businesses and infrastructure development
The autumn budget provides additional funding for regional development, supporting infrastructure projects in underserved areas to boost economic growth outside of London. Businesses located in these regions, or those considering expansion, could benefit from increased funding and development grants. Investing in these areas might also qualify businesses for government support, improving access to funding and easing some of the financial risks associated with scaling operations.
7. There was a 1p drop in the price of a pint….
We’re not sure that this is worthy of more than a brief mention but as it attracted the loudest cheer in the House, here is it!
The Autumn Budget 2024 was absolutely rammed with updates and businesses have been responding at pace since the announcements. We’ve trawled through a lot of the online opinion pieces and found this one by the IFS here one of the more interesting reads.
So how can we help?
The changes introduced in the 2024 Autumn Budget bring both opportunities and challenges for UK businesses and now that the speculation has ended, there are 5 months for businesses to prepare for the pending changes.
If you need to re-evaluate your corportate structure, review your employment contracts or push on with a business sale or acquisition, we’re geared to up support your next business move.
Why not get in touch for a free discovery call with one of our lawyers and we’ll get started on making sure your business is compliant and ready for the new fiscal year.
