The Autumn Budget 2024 was presented by Rachel Reeves on 30th October, bringing forward new policies that aim to support economic stability while introducing measures that impact small to medium-sized businesses (SMBs). From tax changes to digital transformation initiatives, the Budget offers both opportunities and challenges for businesses across all sectors.
How will these changes affect your business finances, operational costs, and overall strategy? Whether you’re a small business owner, self-employed, or managing a growing company, understanding these budget updates will help you make informed decisions as you plan ahead.
Making Tax Digital (MTD) for Income Tax
The Budget confirmed the rollout of Making Tax Digital (MTD) for Income Tax, meaning businesses with annual incomes over £50,000 will need to comply by April 2026. Those with incomes over £30,000 will be included from April 2027. This gradual rollout ensures that businesses of all sizes transition towards a digital tax system, ultimately simplifying record-keeping and tax submissions.
Capital Gains Tax (CGT)
The CGT lower rate will rise from 10% to 18%, and the higher rate from 20% to 24%, effective from October 2024. By 2026, rates for Business Asset Disposal Relief and Investors’ Relief will also align with the main lower rate of 18%. If you’re planning asset sales, it might be a good idea to consult with a financial adviser to help mitigate potential increases in tax liability.
Business Asset Disposal Relief
Formerly known as Entrepreneurs’ Relief, Business Asset Disposal Relief (BADR) rates will increase to 14% from April 2025, aligning with the broader CGT rate of 18% by 2026. This adjustment may affect business owners considering selling their business assets, making it essential to review any planned asset disposals with a tax adviser.
Corporation Tax
To provide tax stability, the Corporation Tax rate will be capped at 25% for the duration of this Parliament. This commitment enables SMBs to plan longer-term investments without the uncertainty of unexpected tax hikes, facilitating better financial forecasting and business growth.
Income Tax Updates
The Budget brought no changes to Income Tax rates, and personal thresholds will be adjusted with inflation starting in April 2028. This gradual increase means that small business owners and employees alike will likely see a reduction in tax liabilities, allowing for some savings over time.
Stamp Duty Land Tax
From 31st October, 2024, the surcharge on Stamp Duty Land Tax (SDLT) for additional properties will increase from 3% to 5%. If your business owns or plans to acquire additional properties, this tax change may affect your property investment strategy.
Fuel Duty Freeze
In a move to counter rising fuel costs, the government extended the fuel duty freeze for another year, keeping the 5p cut in place. For businesses with transportation expenses, this freeze helps alleviate some cost pressures, allowing companies to maintain stable transportation budgets.
Looking After the Retail, Hospitality, and Leisure Industries
The Budget introduces specific reliefs to help retail, hospitality, and leisure businesses thrive. From 2026-27, these sectors will benefit from permanently lower business rates multipliers, along with a 40% relief on small business rates in 2025-26, up to a £110,000 cap. These measures aim to boost high street resilience, providing targeted financial relief.
Alcohol Duty
From February 2025, alcohol duty on draught products will decrease by 1 penny per pint, benefiting businesses in the brewing and pub sectors. This small reduction, along with the removal of mandatory duty stamps on spirits, could bring modest savings, particularly for independent establishments.
Payroll Changes
The Budget confirmed that while PAYE tax thresholds remain stable, employers’ National Insurance Contributions (NICs) will increase from 13.8% to 15% by April 2025. However, the Employment Allowance has been raised to £10,500, and the eligibility threshold removed, helping smaller businesses offset the higher NIC costs.
National Living and Minimum Wage Updates
From April 2025, the National Living Wage will rise to £12.21, with corresponding increases for younger employees and apprentices. This wage hike impacts labour costs, so businesses should assess how these adjustments affect their payroll budgets.
Benefits in Kind (BIK) Updates
Starting in April 2026, most benefits in kind will require payrolling, with exceptions for loans and accommodations. This policy change simplifies reporting for businesses and makes it easier for employees to understand their full taxable benefits.
E-Invoicing Consultation
The government’s 2025 consultation on e-invoicing standards signals a shift towards automation. E-invoicing adoption can streamline SMB invoicing processes, reducing errors and helping companies get paid faster. This consultation may also indicate potential e-invoicing mandates in the future.
HMRC Investments
The Budget includes substantial HMRC investments, with new compliance and debt recovery staff hired over five years. This investment is likely to enhance support for accountants and taxpayers alike, reducing wait times and improving overall service quality.
In Conclusion
The UK Autumn Budget 2024 outlines key adjustments which will present both challenges and opportunities for SMBs in the coming years. It is important that, as a business owner, you stay informed and consult with a financial adviser or accountant who can help you traverse these changes, and manage any additional costs effectively. If you would like any financial help or advice about how these changes will affect your business, get in touch with us at DabHand Accounting today and book y
