The recent Autumn Budget 2024 has introduced important changes that will affect small businesses across the UK. Understanding these updates is crucial for effective business planning.
Our Tax Director, Mark Rhynas, outlines the key changes and explains how SBP can support you through these developments.
Business Taxes
One significant change is the increase in Employers' National Insurance Contributions (NIC), which will rise from 13.8% to 15% for workers earning over £5,000. Previously, this rate applied to earnings over £9,100.
To help small businesses manage this increase, the employment allowance will also rise from £5,000 to £10,500.
Additionally, the VAT rate will remain at 20%, with no changes to the thresholds, and the Corporation Tax will stay at 25% for profits exceeding £250,000.
Personal Taxes
In terms of personal taxes, the Capital Gains Tax (CGT) rates will have an immediate hike from 30th October 2024. The lower rate will rise from 10% to 18%, while the higher rate will go from 20% to 24%. However, the CGT rates for property sales will remain unchanged at 18% and 24%.
The Business Asset Disposal Relief (BADR) will continue with a lifetime limit of £1 million, but the relief percentage will increase to 14% in 2025 and to 18% in 2026.
There are special provisions for contracts entered into before 30 October 2024 but completed after that date for the main rate changes, and for contracts entered into on or after 30 October 2024 for the phased rate change that applies to Business Asset Disposal Relief and Investors' Relief. There are also special provisions for share reorganisations and exchanges where an election is made.
Meanwhile, Income Tax rates will stay the same until 2028, although Scotland will set its own rates later this year.
Inheritance Tax
The Inheritance Tax framework will also see some consistency, with the tax-free threshold remaining at £325,000 and the Residence NIL Rate Band holding at £175,000 per individual and were frozen until 2030. The inheritance tax rate will stay at 40% for estates that exceed these limits.
Additionally, starting in April 2027, inherited pensions will be brought into Inheritance Tax (IHT) for the first time. Removing some favourable tax planning options from 2027.
Changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) will come into effect in 2026, imposing a 20% tax on qualifying assets over £1 million, with a 50% relief available above that threshold.
Minimum Wage Increases
There are also changes to minimum wage rates, with the hourly rate for workers over 21 set to increase from £11.44 to £12.21 starting in April 2025. For those aged 18 to 20, the minimum wage will rise from £8.60 to £10 per hour, while the rate for 16 to 17-year-olds will go up from £6.40 to £7.55 per hour.
While the Autumn Budget presents new challenges, effective planning and expert guidance can help your business navigate these changes successfully. At SBP, we are committed to helping you maximise your business potential in light of the new budget landscape.
Contact us today to learn how we can support you in turning these challenges into opportunities for growth and success.