The UK Autumn Budget for 2024 introduces a range of measures directly impacting business owners across sectors, from tax adjustments and incentives to reliefs designed to foster growth. This guide highlights the primary changes and what they could mean for businesses moving forward.
1. Business Taxation Updates
Corporation Tax
A key measure announced is the capping of the Corporation Tax rate at 25% for the duration of the current Parliament, which maintains the UK’s status of having one of the lowest corporate tax rates among G7 nations. This is intended to provide businesses with greater predictability, encouraging long-term investment. The Corporate Tax Roadmap further reassures companies that policies around Full Expensing, R&D reliefs, and the Annual Investment Allowance will remain in place to support innovation and growth.
Capital Gains Tax Adjustments
Capital Gains Tax (CGT) rates are set to increase. For disposals after 30 October 2024, the lower rate rises from 10% to 18%, and the higher rate from 20% to 24%. Additionally, the Business Asset Disposal Relief (BADR) and Investors’ Relief rates will incrementally increase from 14% by April 2025 to match the main CGT lower rate by April 2026. These increases may affect business owners planning to sell assets or stakes in their businesses, who may want to factor in these adjusted CGT rates into their succession and sale planning.
Employer NICs Increase
From April 2025, employer National Insurance Contributions (NICs) will rise by 1.2 percentage points to 15%. The threshold at which employers begin paying NICs will also be lowered to £5,000 per year. This shift could increase payroll costs, particularly impacting sectors with large workforces. However, the Employment Allowance has been increased from £5,000 to £10,500, which will allow smaller employers to offset NICs and ease the transition.
2. Business Rates and Reliefs
Small Business and RHL Relief
To support high streets and small businesses, the government has frozen the small business rates multiplier for 2025-26. Additionally, businesses in the retail, hospitality, and leisure (RHL) sectors will receive a 40% reduction in their rates, capped at £110,000. By freezing the small business multiplier and introducing targeted reliefs, the government aims to bolster sectors still recovering from the pandemic and inflationary pressures.
Consultation on Business Rates Reform
The government is launching consultations on overhauling the business rates system to address its complexities and ensure it more accurately reflects economic realities. Stakeholders, including business owners, are encouraged to participate, potentially impacting future rate-setting policies.
3. Sector-Specific Incentives
Alcohol Duty Cuts
For breweries, distilleries, and pub owners, the Budget introduces a reduction in alcohol duty on draught products, with the duty on non-draught items set to rise in line with the Retail Price Index (RPI). This move provides relief for smaller producers and pub owners, helping them remain competitive amid inflationary pressures. Additionally, small brewers can expect enhanced relief under the Small Producer Relief scheme.
Support for Energy-Intensive Industries
Significant funding has been allocated for energy-intensive industries, particularly steel and automotive. The government has committed around £350 million across 2024-2026 for energy efficiency and decarbonisation initiatives, providing businesses in these sectors with opportunities for grants and subsidies to help manage high energy costs.
4. Environmental and Green Initiatives
The government’s commitment to environmental goals is underscored by incentives and adjustments that encourage greener business practices:
- Electric Vehicle (EV) Incentives: Companies that incorporate EVs into their fleets will benefit from an extended 100% First-Year Allowance for zero-emission vehicles and EV charge points for another year. This extension supports businesses looking to reduce emissions through vehicle electrification.
- Energy Profits Levy: For oil and gas companies, the Energy Profits Levy rate will increase from 35% to 38%, with the removal of the investment allowance. This adjustment aims to support the energy transition, although businesses within the sector may face higher tax liabilities.
5. Updates to Property and Inheritance Tax
Stamp Duty Land Tax (SDLT)
From 31 October 2024, the Higher Rates for Additional Dwellings surcharge will increase from 3% to 5%. This increase affects property investors, including landlords and second-home buyers, who will face a higher surcharge when purchasing additional properties.
Inheritance Tax Reforms
The Budget introduces changes to inheritance tax, particularly impacting unspent pension pots and reducing reliefs for agricultural and business properties. The 100% rate of agricultural and business property relief will continue but will apply only to the first £1 million of assets, with a reduction to 50% thereafter. These changes may influence estate planning strategies for business owners, particularly those in agriculture.
6. Investments in Small Business Growth
Small business owners can benefit from enhanced funding channels designed to promote growth and investment. The British Business Bank receives over £250 million annually for small business loan programmes, including the Growth Guarantee Scheme. Funding has also doubled for the Made Smarter Adoption programme to £16 million, expanding access to digital technology for manufacturers across the UK’s regions.
7. Simplification and Administrative Reforms
The government has committed to simplifying the tax system, with a focus on reducing burdens for smaller businesses. Measures include the upcoming digitalisation of inheritance tax and ISAs by 2027, enhancing HMRC’s digital interface, and advancing pre-populated self-assessment tax returns to streamline the filing process. For small business owners, these changes aim to reduce administrative costs and improve accuracy in tax reporting.
Final Thoughts: Navigating the 2024 Budget Changes
The Autumn Budget 2024 provides a mixed outlook for business owners, combining supportive measures like increased Employment Allowance and relief for specific sectors with costlier elements, such as CGT rate hikes and increased NICs. For many business owners, taking full advantage of tax incentives, participating in consultations, and exploring available grants will be crucial to adapting successfully to the evolving financial landscape.
Is the 2024 Budget Beneficial for Your Business? Each measure’s impact will vary depending on the sector, size, and operational structure of your business. To prepare for these changes, consider consulting with financial professionals to assess your specific situation and explore potential opportunities within the new fiscal framework.