Autumn Budget 2024 – What does it mean for small business?

Almost four months after winning the General Election, Labour delivered their first Budget in 14 years on Wednesday 30th October 2024. 

Chancellor Rachel Reeves committed to raising £40 billion in taxes, while keeping Labour’s election promise to invest, boost long-term economic growth and not raise taxes for working people. 

Small businesses will be impacted by many of the changes announced in this Budget, including increased staffing costs and changes to tax reliefs. Here we look at the key announcements for small business in Labour’s Autumn Budget¹.

Staffing costs 

Increase in employers’ National Insurance Contributions

From April 2025, the rate of employers’ National Insurance Contributions will increase by 1.2%, to 15%. 

At the same time, the level at which employers must start paying National Insurance contributions will decrease. Until now, the per-employee threshold at which employers start paying National Insurance is £9,100; from next April, this threshold has been reduced to £5,000.

Increase in Employment Allowance

While employer’s National Insurance Contributions will be increasing, the Employment Allowance will also increase. This means the amount by which eligible employers can reduce their National Insurance liability will rise.

Currently, the Employment Allowance is £5,000 per business, which will rise to £10,500 next April. 

The £100,000 eligibility threshold will also be removed, meaning more employers will benefit from this allowance.

Increase in the National Living Wage

As announced by Labour ahead of the Budget, the National Living Wage will rise. From April 2025, the National Living Wage will rise by 6.7%, to £12.21 an hour.

Additionally, the National Minimum Wage for 18-20 year olds will increase by 16.3%, to £10 an hour, in the first steps towards a single adult rate.

Taxation

Increase in Capital Gains Tax

Effective from the day of the Budget – 30th October 2024 – Capital Gains Tax was increased. The lower rate rose from 10% to 18%, while the higher rate, from 20% to 24%.

Capital Gains Tax for residential properties remains unchanged at 18% and 24%, respectively.

Business Asset Disposal Relief

Business Asset Disposal Relief will increase to 14% in April 2025, and 18% from 2026-27. The lifetime limit for Business Asset Disposal Relief will be maintained at £1 million. 

Duty

Freeze on fuel duty extended 

Once again, fuel duty has been frozen for another year, and the temporary 5p cut has been extended for another year, too.

Alcohol duty changes

From February 2025, non-draught products will see an increase in alcohol duty, in line with the Retail Price Index inflation.

Alcohol duty on draught products, however, will be cut by 1.7% at the same time. 

Business rates 

Reeves announced her intention to permanently lower tax rates for retail, hospitality and leisure properties from 2026-27.

In the meantime, once the current relief of 75% ends in 2025, relief on business rates will be 40% for the retail, hospitality and leisure industries, up to a cap of £110,000 per business.

In addition, the small business tax multiplier will be frozen again next year.

Corporate Tax Roadmap

Alongside the Autumn Budget, the Government also published their Corporate Tax Roadmap, designed to give businesses certainty and help them plan for future growth. 

Key among the commitments for small business owners are:

• A cap on Corporation Tax at 25% for the duration of parliament
• Full expensing and the £1 million Annual Investment Allowance are to be maintained 

Support for Small Business

And finally, Reeves announced that next year the Government will publish a Small Business Strategy Command Paper. This will provide clarity on how Labour plan to support small businesses going forward.

If your business is interested in finance to help you grow or adapt to these changes, you can apply for a loan or line of credit in minutes. Check if you’re eligible today on our website.

01/11/24: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.