The Autumn Budget 2024: How it affects your small business

Here’s our small business summary of the Autumn Statement, explaining all the major tax, National Insurance, and minimum wage changes.

Here’s your breakdown of the significant business announcements from the Autumn Statement 2024.

A budget to fix the foundations of the economy.

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, provide change for working people, mend the NHS and begin rebuilding Britain.

Overall, the announcements have been kind to the average worker but will significantly impact UK small businesses more. Increases in the minimum wage employers' National Insurance (NI) contributions and changes to Capital Gains Tax are likely to be the big takeaways for most small business 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.

Tax increases overall by about £36 billion per annum. In addition to the £22 billion hole identified in the current year's departmental spending, much of which recurs in future years, the previous forecasts for coming years implied unrealistic cuts in all unprotected areas.

£24 billion comes from an increase in employers’ National Insurance, £6 billion from changes in capital gains and inheritance tax, and £4 billion from increased fraud detection and other HMRC compliance measures. The balance of £2 billion comes from smaller measures, including the previously announced change to VAT on private school fees.

Let’s look at the big announcements and how they will likely affect small businesses.

Critical changes to tax and National Insurance:

Employers’ NI contributions to increase.

Employers’ National Insurance (NI) is currently charged 13.8% on income over £9,100 per employee. This will increase in April 2025 to 15% on income over £5,000 per employee. The additional costs will be reduced/eliminated for smaller employers by increasing the Employment Allowance from £5,000 to £10,500.

Capital Gains Tax (CGT) rates change.

CGT is generally charged at 10% for gains falling within the basic rate tax band and 20% for gains above that tax bracket. From 30/10/2024, those rates will increase to 18% and 24%, aligning with the current rates charged on residential property disposals.

BADR rate to increase.

Business Asset Disposal Relief (BADR) levies a charge of 10% on the first £1 million of capital gains arising on the disposal of qualifying businesses. That rate will increase to 14% from April 2025 and 18% from April 2026.

Amendments to Inheritance Tax (IHT).

The current threshold of £325,000 generally, or £500,000 where a residence is passed on to direct descendants, has been extended by two years to April 2030. From April 2027, pension pots and death benefits paid by a pension fund will be brought within the scope of IHT. Currently, specific agricultural property and businesses can be passed on free of IHT; from April 2026, the first £1 million will be exempt, together with 50% of the excess over £1 million, with the balance falling within the estate for IHT purposes. Shares listed on the Alternative Investment Market (AIM) and held for over two years are currently exempt from IHT; from April 2026, only 50% will be exempt, so an effective IHT rate of 20% on those shareholdings.

Other tax and duty changes include:

Stamp duty

The additional stamp duty on purchasing second (and other additional) residential properties will increase from 3% to 5% from 31/10/2024. Stamp duty on properties acquired by companies will also increase by two percentage points.

Business rates

A business rate relief of 40% for businesses in the retail, hospitality, and leisure sectors will be applied from April 2025, capped at a relief of £110,000.

Electric vehicles

The 100% first-year allowance on new electric vehicles has been extended for a year up to 31/03/2026 (corporation tax) and 05/04/2026 (income tax).

Fuel duty

Although widely expected to increase, fuel duty has remained frozen for a further year up to 22/03/2026.

Notable non-tax measures:

Minimum wage – minimum wages are increasing from April 2025:

Interest on late tax payments

Interest charged on late tax payments increases by 1.5 percentage points to the Bank Base Rate plus 4%.

Boost to HMRC compliance staffing.

HMRC is increasing its compliance staff – effectively fraud detection – by 5,000 people by 2029/30 (ramping up, starting in November 2024) and by 1,800 staff in debt management, focusing on collecting overdue tax and cracking down on non-compliance.

Non-dom tax regime to be replaced

The non-dom tax regime will be scrapped and replaced with a residence-based scheme covering new arrivals for the first four years of their UK tax residence. Details are yet to be announced.

Talk to us about how the Autumn Statement will affect your business.

As Rachel Reeves herself has said, this is not a budget the Government would want to repeat. Some strict measures have been needed to fill the £22 billion hole in the public purse and to set the UK Plc on a course that will drive the economy forward.

Get in touch if you’re concerned about any measures announced in the Autumn Statement. Our team will happily run you through the significant changes and their potential impacts.