The 7 Most Significant Autumn Budget Changes that Impact Small Business & Individuals

Rachel Reeves, the Chancellor of the Exchequer, delivered the Autumn Statement on 30 October 2024, saying that this was a budget intended to fix the foundations of the economy, deliver change for working people, mend the NHS and begin the process of rebuilding Britain.

On the whole, the announcements have been kind to the average worker, but will have a greater impact on UK small businesses. Increases in the minimum wage and employers’ National Insurance (NI) contributions, and changes to Capital Gains Tax are likely to be the big takeaways for most small businesses owners.

It’s a budget of short-term pain for long-term gain, with tough decisions made now to get the UK economy back on its feet and UK businesses on a more stable footing.

Here’s Monies’ round up of the Autumn Budget 24 shining a spotlight on what we believe to be the 7 most significant budget changes that impact small business and individuals.

For Business:

• Living Wage will increase from £11.44 to £12.21 per hour for over 21’s from April 2025.

• Employers National Insurance to increase by 1.2% to 15% and will kick in on all earnings over £5000 per year instead of £9100 per year. This is a direct tax on jobs but to help to help small businesses the employment allowance ( a discount applied to employers national insurance will increase from £5000 per year to £10,500 per year .

• A new permanent 40% business rates relief will be introduced for retail, hospitality and leisure sectors. This is capped at £110k. This will assist business sectors that struggle at the moment and currently have 75% business rates relief

Our thoughts:

Here are Monies, we think the increase in living wage along with the increase in employers national insurance contributions is a concern for us and for many of our clients. It’s essential now that we look at 2025/2026 and financially plan what the implications are for our businesses. No doubt the childcare and hospitality sector will where there is a reliance on people will be affected to a greater degree.  The increase in the employment allowance is welcome and overall the impact on small businesses could have been much worse.

The government promised business rates reform and it’s long overdue.  This is an increase in business rates but again it has been softened for specific sectors. Again, the impact of this is not as bad as it could have been but is an added cost nevertheless.

Our advice: Understand the impact on your business and build a financial plan for the changes. Those that understand their numbers tend to be stronger for it.

For Individuals:

• Income Tax thresholds will increase in line with inflation from April 2028. They have been frozen since 2022 and are referred to as a “stealth tax” implemented through “fiscal drag” in times of rising wages during inflationary periods.

• Capital Gains Tax increases from 10% for standard rate taxpayers to 18% and from 20% for higher rate tax payers to 24%. There was no capital gains tax increase mentioned for residential property and so this will remain at 18% and 24% respectively.

• Business Asset Disposal Relief (formerly Entrepreneurs Relief) remains at 10% for the first £1m in lifetime gains until April 2025. It will then move to 15% for disposals after April 2025 and then 18% for disposals after April 2026.

• Inheritance Tax- The £325k nil rate band will be frozen for a further 2 years until April 2030. From April 2027, inherited pensions will be brought within the charge for inheritance tax.

Our thoughts:

The potential to increase the tax thresholds from 2028 was unexpected but welcomed. It was framed as putting money back in the pockets of working people. Nevertheless, between now and 2028 many more will be pulled into paying tax and at higher rates.

The gap between income taxes and capital gains taxes have been narrowed but have not been aligned as feared.  The capital gains tax rates applied to residential property has not been changed and remains at 18% and 24%. This gives landlords some certainty in the event that they wish to exit the rental market.

Business Asset Disposal Relief rates of tax will increase from 10% on the first £1m in gains to 18% from April 2026. This acts as no incentive for entrepreneurs to start businesses.  Many business owners have spent years being under paid and have made sacrifices to start and grow businesses. The change in this relief is disrespectful to those who “genuinely strive” and work hard to create wealth.

Pension schemes will now be included in your estate for inheritance taxes and again this discourages saving and wealth creation that can be passed through generations.  This government has been, in our opinion, short sighted in implementing this changed that is designed to drag more estates into inheritance tax.

Navigating Your Way Through The Autumn Budget 2024:

If you’re having any concerns or want to understand the impact of the Autumn Budget on your business, our team of friendly financial and accounting experts are on hand to help you plan for 2025/2026. Our experienced professionals can help to handle your finances so you can focus on what matters most—growing your business. Get an instant quote online today.