The Chancellor’s Autumn Budget 2024 introduces several significant changes affecting business owners. Here’s a summary of the most relevant updates:
For Business Owners
Employer’s National Insurance Contributions (NICs): Effective April 2025, the employer NIC rate will increase by 1.2%, moving to 15%. Additionally, the earnings threshold for employer NICs will reduce to £5,000 (previously £9,100). However, the Employment Allowance will increase from £5,000 to £10,500 to help alleviate this burden for smaller businesses.
Minimum Wage Increase: From April 2025, the National Minimum Wage will rise to £12.21 for adults aged 21 and over. This increase is part of the “Make Work Pay” initiative, aimed at boosting income for lower-wage earners and impacting wage costs for businesses employing lower-paid staff.
Business Asset Disposal Relief (BADR): The BADR rate will increase from 10% to 14% in April 2025 and further to 18% by April 2026. However, the £1 million lifetime limit on eligible gains remains intact, continuing to support business owners in their exit planning by retaining some level of relief.
Corporation tax remains the same with the main rate at 25%, and the small rate (less than £50,000 profit) at 19%.
Fuel duty kept frozen.
Other
Stamp Duty Land Tax (SDLT) Increase: Effective immediately, the SDLT surcharge on the purchase of additional properties will rise from 3% to 5%. This measure aims to ease housing availability by dissuading buy-to-let and second-property purchases.
Capital Gains Tax (CGT): The Budget confirmed CGT rate increases for non-property assets, with the basic rate rising from 10% to 18% and the higher rate from 20% to 24%. For landlords and others disposing of residential property, CGT rates remain at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers, maintaining the structure set in the Spring 2024 Budget.
Inheritance Tax (IHT) Changes
Pensions Subject to IHT: Starting from April 2027, pension assets will be included within the scope of inheritance tax. Previously exempt, this change means that pensions passed on to beneficiaries will now form part of an estate for IHT purposes, impacting legacy planning for those holding substantial pension savings.
Inheritance Tax Adjustments: The standard IHT allowances remain frozen, with the nil-rate band at £325,000 and the residence nil-rate band at £175,000. However, exemptions for certain assets and trusts are under review, and the government has signalled a commitment to ensuring that IHT rules capture a wider array of assets.
Should you have any questions on how these changes may affect your finances or business plans, please feel free to reach out.
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