Key takeaways from the Autumn Budget 2024 for Small Business Owners

On 30 October 2024, Chancellor Rachel Reeves unveiled the UK's Autumn Budget, bringing significant updates that affect individuals and businesses across the UK. ​

There’s been a lot to unpack from the budget, so below we’ve provided a handy overview of the most important changes for small business owners, focusing on tax, wages and allowances. Below we highlight the key changes that will impact the financial landscape for small business owners and their teams.​

One of the most impactful announcements from the budget was around employer’s national insurance. From April 2025, employer National Insurance contributions (NICs) will rise by 1.2%, bringing the rate to 15%. Additionally, the income threshold at which employer NICs apply will drop from £9,100 to £5,000. This dual adjustment increases NIC costs for employers and, small business owners will need to prepare for these cost hikes as they budget for their teams.​

It’s not all bad news, however, in response to calls from the small business community, the Employment Allowance will more than double from £5,000 to £10,500 starting in April 2025. This increase provides significant National Insurance savings for smaller businesses. With the updated allowance, a small firm could employ up to four individuals on the National Living Wage without paying any NICs. ​

The government also removed the NICs cap, meaning that businesses of all sizes can now access this allowance. For the smallest employers, this relief effectively shields them from the NIC increase.​

Remember, that companies where the only employee earning above the secondary threshold is a company director will continue to not be eligible for the employment allowance.​

In a move aimed at balancing fiscal responsibility with economic sensitivity, personal tax thresholds for income tax and NICs will be indexed to inflation beginning in 2028. This will be the first change since thresholds were frozen in April 2021.​

The National Living Wage for workers over 21 is set to rise by 6.7%, reaching £12.21 per hour in April 2025. This increase provides a considerable boost to employees, translating to an extra £1,400 annually for a full-time employee. Employers should plan to accommodate this increase in payroll costs, which will be an added consideration alongside NIC changes.​

Business rates relief for SMEs in retail, hospitality, and leisure sectors will continue at 40% until 2026, though this represents a reduction from the previous 75% relief. From 2026 onwards, a new structure of permanently lower business rates will be introduced, aimed at stabilising this cost for SMEs in the long term. This relief remains capped at £110,000.​

For broader CGT changes, the higher rate will rise from 20% to 24%, and the lower rate from 10% to 18%. Capital gains tax on residential property remains the same.​

Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) will continue to provide discounted Capital Gains Tax (CGT) for those selling a business, though at slightly increased (and therefore less beneficial) rate. The rate will move from 10% to 14% in April 2025 and up to 18% in 2026. For entrepreneurs relying on this relief as part of their retirement planning, the change brings some additional tax burden but preserves the relief’s value for the foreseeable future.​

Encouraging investment in growth, the Annual Investment Allowance remains at £1 million, and R&D tax reliefs stay at their current levels, providing ongoing support for business reinvestment and innovation. The Small Profits Rate for Corporation Tax is also retained, which is especially beneficial for smaller firms looking to manage their taxable profits.​

Read more: Understanding the basics of Corporation Tax​

Effective April 2027, pensions will fall within the scope of inheritance tax (IHT) calculations, impacting long-term estate planning. Additionally, Business Property Relief and Agricultural Relief will only apply to the first £1 million of combined assets, leaving higher-value businesses and farms with some potential IHT exposure. Small businesses and farms with significant asset values should assess their succession plans to mitigate potential IHT liabilities.​

The budget keeps fuel duty frozen, with a 5p cut extended for another year, a relief for transport-reliant businesses. Meanwhile, alcohol duty will increase by the RPI rate of inflation, except for a 1.7% cut on draught drinks, benefiting hospitality businesses.​

The Autumn Budget 2024 reflects a balanced approach, offering relief to small businesses while setting out fiscal measures to support broader economic stability. With changes in National Insurance, wages, and tax thresholds, small businesses will see both cost increases and areas of support.​

For more specific guidance tailored to your business, feel free to reach out to us here at Beany. ​

Need a helping hand? At Beany, we specialise in making accounting and tax a breeze. Our team of experts can handle your tax compliance so you can focus on what you do best – running your business. Let Beany be your trusted accounting partner. Get in touch with us or book a call to discuss your accounting requirements.​