Key Highlights from the Autumn Statement 2024 Impacting Businesses

An Economy-Focused Budget

On October 30, 2024, Chancellor Rachel Reeves delivered the Autumn Statement, outlining a budget intended to “fix the foundations of the economy,” support working people, reform the NHS, and start the process of rebuilding Britain.

While the announcements may initially seem beneficial to workers, they’re likely to have significant impacts on small UK businesses, potentially affecting workers in the long term. Key changes, including increases in the minimum wage, employers’ National Insurance (NI) contributions, and adjustments to Capital Gains Tax, stand out as particularly relevant for business owners.

The Chancellor described the budget as “short-term pain for long-term gain,” with tough decisions aimed at stabilizing the UK economy and placing businesses on more secure ground. She expressed hope that such a budget won’t be necessary again.

With total tax increases of about £36 billion annually, here’s where the revenue is expected to come from:

• £24 billion from higher NI contributions for employers

• £6 billion from adjustments to Capital Gains and Inheritance Taxes

• £4 billion from fraud prevention and HMRC compliance tightening

• £2 billion from smaller measures, such as VAT adjustments for private school fees

Key Tax and National Insurance Updates

Employers’ NI Contributions Increase

• Current rate: 13.8% on employee income over £9,100

• New rate (from April 2025): 15% on income over £5,000

• Offset for smaller employers: The Employment Allowance will increase from £5,000 to £10,500 annually

Capital Gains Tax (CGT) Rates Adjustment

• Current rates: 10% (basic rate) and 20% (higher rate)

• New rates (effective immediately from October 30, 2024): 18% and 24%, aligning with rates on residential property disposals

Business Asset Disposal Relief (BADR) Rate Increase

• Current rate: 10% on the first £1 million of capital gains for qualifying business sales

• New rates: 14% (from April 2025) and 18% (from April 2026)

Inheritance Tax (IHT) Amendments

• Threshold: The IHT threshold remains at £325,000 (or £500,000 if passing a residence to direct descendants) until April 2030

• Pension Pots: From April 2027, pension funds and death benefits will be subject to IHT

• Agricultural Property & Businesses: From April 2026, only the first £1 million will be exempt from IHT, with the excess taxed at an effective rate of 20%

• Alternative Investment Market (AIM) Shares: From April 2026, only 50% of AIM shares held for over two years will be exempt from IHT

Additional Tax and Duty Changes

• Stamp Duty: Additional duty on second homes and company-purchased properties will rise by 2% from October 31, 2024.

• Business Rates: From April 2025, businesses in retail, hospitality, and leisure will receive a 40% relief, capped at £110,000, down from the previous 75%.

• Electric Vehicles: The 100% first-year allowance for new EVs has been extended to March 31, 2026 (corporation tax) and April 5, 2026 (income tax).

• Fuel Duty: Frozen for another year, until March 22, 2026.

Notable Non-Tax Measures

Minimum Wage Increase

• Minimum wage rates will rise from April 2025 as per the table below:

Higher Interest on Late Tax Payments

• Interest on late payments will rise by 1.5 percentage points to the Bank Base Rate plus 4%.

HMRC Compliance Boost

• HMRC will add 5,000 compliance staff by 2029, with 1,800 of them in debt management roles. However, there’s no planned increase in customer support staffing.

Replacement of the Non-Dom Tax Regime

• The non-dom regime will be replaced with a residence-based scheme covering the first four years of UK residency, with further details to follow.

Conclusion

While the Chancellor aims to grow the economy, this budget may actually make it harder for small businesses by increasing employment costs and reducing incentives for investment in startups—both essential for economic growth.

If you’re wondering how these changes, especially the increase in Employers’ NI, will impact your payroll, feel free to get in contact. Alternatively if you would like to schedule a call to go through this in more detail please do so here.

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© Virtual CFO Ltd T/ Accounts Etc. All rights reserved. Registered in England & Wales No. 07430019