Chancellor Rachel Reeves delivered the UK Autumn Budget on 30 October 2024. Read on for a summary of the key points affecting small businesses and their owners.
TLDR
Larger employers are hit with higher employers NI bills. Most individuals see no changes to their tax rates or thresholds apart from the increase in Capital Gains Tax to 18% (from 10%).
Personal Tax and National Insurance
Rates of income tax remain unchanged at 20% for Basic Rate Taxpayers and 40% Higher Rate.
The tax free Personal Allowance remains frozen until April 2027/28 at £12,570 as do the Basic and Higher Rate thresholds (HR threshold is £50,270). This comes along with a pledge to resume increasing these starting 2028/29.
👍 Employee's National Insurance (on earnings over £12,570 per year) remains at 8%.
⛔ Employer's National Insurance is increased to 15% (from 13.8%) on earnings over £5,000 (previously £9,100).
This of course is the biggest impact announcement of the budget - it hits employers, not employees. Will it affect hiring? Thankfully most small employers are shielded from paying any Employers NI thanks to the Employment Allowance which is being increased to £10,500 (from £5,000). This means that, on average a business can employ 3-4 full time staff on NMW without incurring an Employers NI bill.
👍 National Insurance for the self-employed remains at 6%.
Capital Gains Tax (CGT)
⛔ Capital Gains tax rate is increased to 18% (from 10%) for basic rate taxpayers and 24% (from 20%) for Higher Rate taxpayers. Both are now in-line with the CGT rates for the sale of residential properties (usually BTL's).
Thankfully, the CGT Exemption of £3,000 remains in place (that itself has fallen a lot in recent years) and Business Asset Disposal Relief (BADR) remains in place (for those selling businesses) albeit at 14% (up from 10%).
Other
Electric Cars (EV): The announced "no change to the beneficial company car regime" means that Benefit-in-Kind rates will increase, as planned, as follows 3% in 2025/6 (from 2%), 4% in 2026/27, 5% in 2027/28, 7% in 2028/29 and 9% by 2029/30.
National Minimum Wage to increase by 6.7% to £12.21 per hour from £11.44 (for those aged over 21)
Corporation Tax rates remain at 19% for profits up to £50,000 and the main rate at 25%.
Making Tax Digital (MTD): The self-employed with a turnover over £50,000 to be compliant with MTD from April 2026 (if turnover > £30,000 from April 2027 and those with turnover > £20,000 to join MTD sometime afterwards). For more on what this means practically see: How MTD for Income Tax will affect small businesses
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