Autumn Budget 2024 – key announcements for small businesses

By Anna Jordan on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

Welcome to the Autumn Budget 2024, where we’ll be keeping you up to date on the announcements affecting small businesses.

Chancellor Rachel Reeves is unveiling her first Budget, with little revealed so far. However, it has been reported that tax cuts and spending rises could total up to £40 billion.

You can watch the Budget on BBC iPlayer, the BBC News website or on parliamentlive.tv

Autumn Budget 2024 and how it affects small businesses

National Minimum Wage increase

Before the Budget, Labour confirmed that the National Minimum Wage would be increasing to £12.21 (a 6.7 per cent increase) for adults over 21 from April 2025. For 18-20-year-olds, the minimum wage will go from £8.60 to £10. Meanwhile, apprentice wages will rise from £6.40 to £7.55 per hour.

Suzanne Brooker, Restructuring, Reorganisation and Insolvency Partner at Spencer West LLP:

“The confirmation to raise the minimum wage and to increase the employer’s NIC will place a further financial burden on UK business against a backdrop of increasing costs of borrowing (due the interest rate rises already in play) and inflationary rises in supply chains already in place.

These additional employment liabilities will undoubtedly result in operational reductions to right size financial performance or a further increase in the costs of products or services as costs are passed on which in turn affects growth plans.”

Increase in employers’ National Insurance

Shah: “The increase to employers National Insurance by 1.2% and lowering the threshold to £5,000 is huge, and generates well over half of the £40bn of tax increases.”

Business rates

Asif Alidina, Co-Founder & CEO of Inntelo AI, said: “This was a disappointing Budget for the hospitality sector. After years of hardship, this was not the time to reduce critical support, leaving businesses grappling with higher staffing costs while faced with higher business rates. While the sector’s call for an extension to that relief were addressed, the lower rate of relief will place an additional burden on an industry already under strain. 

Capital Gains Tax increase

Tom Golding, Corporate Tax Partner at PKF Littlejohn, commented: 

“Speculation is finally over, the lower rate of CGT will increase to 18% and higher rate to 24%. There will no doubt be relief that the reports of an increase to as high as 39% have not come to fruition. Will this change really have the impact that the Chancellor is anticipating having seen a flurry of activity pre-Budget Day?”

Nimesh Shah, CEO at Blick Rothenburg, said: “Capping Business Property Relief at £1m and offering a discount of 50% on the remainder is a blow to family businesses.”

“If I heard correctly, there’s no overnight change to Capital Gains Tax, and this will take effect from 6/4/25. Whilst it’s only a slight 4% increase to CGT, I expect there will be a rush of transactions before the end of the tax year – this will give a big enough boost to CGT receipts.”

Business Asset Disposal Relief

Inheritance Tax (IHT)

Corporate tax roadmap

Nikki Lidster, Head of SME at Zurich Insurance, comments: “An increase in Employer’s National Insurance (NI) contributions to 15% in April 2025 alongside the increase in the National Living Wage to £12.21 per hour and the reduction in the allowance to £5000, despite the reform to the employment allowance, will hit small and medium-sized enterprises (SMEs) hard at a time when many are already struggling to make ends meet. While the increase in NI will raise significant revenue, the lack of time to prepare will mean many small businesses could struggle to forecast the impact of the increase on their longer-term financial planning. An increase such as this could mean SMEs won’t be able to invest in business development, new and existing talent or fulfil expansion plans in the future.” 

“The UK’s 5.5 million small businesses are the losers in this budget, as they will be the ones forced to fund the minimum wage rise and the National Insurance increase. While it will be easier for larger organisations to respond and grow, a business with a dozen employees looking to expand is being all but commanded to stop hiring.

“It is well known that the ‘job taxes’ like the change to National Insurance end up largely passed onto workers, so this pain will ultimately be passed onto employees. Workers will undoubtedly be asked to do more as employers cannot afford to hire the help they need, leading to poorer productivity and a rise in stress and burnout. Employment Hero research shows burnout already impacts – these changes will just exacerbate this.”

Neil Rudge, Chief Banking Officer, Commercial at Shawbrook comments: “Having navigated the pandemic and the cost-of-living crisis, SMEs are now facing into the decision to increase the NI rate for employers with rising costs already a key concern for the majority of SME owners and management teams (72%).  

“Business owners however will be reassured by the Government’s commitment to growth, and with numerous infrastructure projects announced, businesses within these sectors and regions could see benefits in the future.  

“For businesses thinking about their own budgets, and growth plans for the years ahead, understanding the right finance options will be key. Whether they need to prioritise managing their cash-flow or are gearing up to a big event in the coming years, speaking to a professional early will ensure they are making the most of the options available.”

Autumn Budget 2024 live blog

13:26: Providing additional funding to tackle gangs in shoplifting and removing immunity for minor shoplifting.

13:15 Corporate tax roadmap. Cap Corporation Tax at 25 per cent. Will maintain full expensing and R&D relief.

13:14: From 2026/27 – introduce two permanently lower business rates for retail, leisure and hospitality. The current 75 per cent relief, due to expire in 2025, will be replaced by a 40 per cent relief on business rates for 24/25, up to a maximum discount of £110,000. Small business tax multiplier frozen from next year.

Alcohol Duty will go up for drinks not on draft in line with the retail price index (RPI). Draft beverages duty will cut. A ‘Penny off a pint in the pub’, as Reeves says.

Company car tax incentives for electric vehicles will be maintained.

13:11: AIM market sales will get 50 per cent tax relief.

13:11: Reform Agricultural Property Relief and Business Property Relief. From April 2026, the first £1 million of combined business and agricultural assets won’t be subject to IHT. For assets over £1m, there will be 50 per cent relief, at an effective rate of 20 per cent.

13:09: IHT thresholds will be frozen until 2030.

13:09: EIS and SEIS extended.

13:08: The lifetime cap of Business Asset Disposal Relief will remain at £1 million.

13:07: Capital Gain Tax – the lower rate will increase from 10 per cent to 18 per cent and the higher rate from 20 per cent to 24 per cent.

13:06: Increasing employment allowance from £5,000 to £10,500.

13:04: Increase in employers’ NI by 1.2 per cent to 15 per cent from April 2025. The threshold at which businesses will start paying NI on employees earnings will also be reduced from £9,100 to £5,000.

13:02: Fuel Duty frozen for another year.

13:00: Increased protection for workers from unfair dismissal, plus improved parental rights.

12:57: National Living Wage confirmed to increase 6.7 per cent from April 2025 for adults over 21. 18-20-year-olds will be entitled to £10 an hour.

12:56: Government will modernise HMRC systems and clamp down on umbrella companies.

12:50: Providing opportunities for SMEs as well as measures affecting R&D.

12:49: Creating Skills England.

12:48: OBR will publish growth forecast for 10 years. CPI inflation will average 2.5 per cent this year, 2.6 per cent in 2025, then 2.3 per cent in 2026, 2.1 per cent in 2027, 2.1 per cent in 2028 and 2 cent in 2029. Real GDP growth will be 1.1 per cent in 2024, 2 per cent in 2025, 1.8 per cent in 2026, 1.5 per cent in 2027, 1.5 per cent in 2028, and 1.6 per cent in 2029.

12:46: Government will maintain inflation target of 2 per cent.

12:36: Reeves says the only way to growth is ‘invest, invest, invest’.

Read more on Autumn Budget 2024

Autumn Budget 2024 – what’s in it for small businesses? – Ahead of the Autumn Budget 2024, we take a look at the announcements that Chancellor Rachel Reeves might make that affect small businesses

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