Autumn Budget 2024: Impact on Owner-Managed Businesses
Owner-managed businesses are facing a critical period following the announcements in the Autumn Budget 2024. From increased National Insurance Contributions (NICs) to business rates relief adjustments, these changes are poised to affect day-to-day operations and financial planning for small businesses.
Here’s a comprehensive guide to help owner-managed businesses understand the implications and potential strategies for your business.
Overview of the Autumn Budget 2024
The Autumn Budget 2024 has introduced several measures impacting owner-managed businesses. Focusing on raising revenue through taxes, this budget significantly affects employment costs, Capital Gains Tax (CGT), and National Living Wage adjustments. Below, we break down these changes and their implications on both operational and strategic levels.
Key Impacts of Budget 2024 on Owner-Managed Businesses
Owner-managed businesses face multiple new challenges, especially in areas of tax and payroll.
Tax Increases for Small Business Owners
Employer’s National Insurance ("NIC") Rise: What You Need to Know
One of the standout changes from April 2025 is the employer's NIC increase from 13.8% to 15.0%. Although it seems minor, this 1.2% hike represents an 8.7% increase in actual costs. Coupled with a reduced NIC threshold, down from £9,100 to £5,000, this shift could particularly impact businesses that rely on lower-wage staff, such as in hospitality and leisure.
National Living Wage Increase: Financial Implications
Also effective from April 2025, the National Living Wage is set to increase by 6.7%, moving from £11.44 to £12.21 per hour. For owner-managed businesses with employees on minimum wage, this change means additional payroll costs.
Changes in Employment Regulations
The budget’s regulatory measures impose stricter requirements on wages and employment practices, affecting recruitment and promotion strategies.
Mitigating Rising Employment Costs
Employment Allowance Doubling
To alleviate some of the burden, the Employment Allowance will double to £10,500. Here’s what it means for different types of businesses.
Benefit of Doubling Allowance for Small Employers
The increased allowance helps small employers stay competitive by offsetting some of the additional NIC costs without potentially needing to compromise on employment levels.
Larger Employers and the NIC Cap Removal
With the NIC cap removed, larger employers can now take advantage of the Employment Allowance. Do make sure you claim this from 6 April 2025!
Capital Gains Tax ("CGT") Adjustments
Rate Increase & Business Asset Disposal Relief
From October 2024, CGT rates rise from 10% to 18% for the lower rate and from 20% to 24% for the higher rate. The Business Asset Disposal Relief ("BADR") rate will also increase, starting at 14% in 2025 and reaching 18% by 2026.
Strategies for Managing Increased CGT Rates
For business owners planning to exit, careful planning is essential to manage the rising CGT rates effectively. Consider timing your business sale or restructuring to align with these changes and minimise the tax impact.
Business Rates Relief for the Hospitality Sector
The Budget has introduced a 40% business rates relief for eligible hospitality, retail, and leisure properties in England. This relief, capped at £110,000 per business, can benefit small businesses in these sectors significantly, particularly those in places like Bognor Regis where tourism is a significant contributor to the local economy.
Corporation Tax Stability and Investment Allowances
Maintaining the 25% Corporation Tax Rate
While there was concern about further increases, the Corporation Tax rate will remain steady at a maximum rate of 25%, with smaller business still benefiting from a rate of 19% on profits up to £50,000.
Full Expensing and R&D Relief
The continuation of full expensing relief and R&D credits supports owner-managed businesses that prioritise reinvestment and innovation, keeping UK firms competitive on a global scale.
Impact of Changes in Inheritance Tax (IHT)
Business Property Relief and Planning for Succession
From April 2026, the cap on Business Property Relief and Agricultural Relief will be set at £1 million, with a 50% tax rate above this threshold. This means business owners must be proactive with estate and succession planning to ensure smooth transitions.
Planning for Succession
Consider strategies such as early asset transfers to family members or the use of trusts to minimise future tax liabilities. Diversifying ownership among family members could also lessen the impact of these IHT changes.
How Giraffe Accountants Can Help
At Giraffe Accountants, we specialise in supporting owner-managed businesses through complex changes like the Autumn Budget. Our team offers local expertise tailored to your business’s unique needs, whether you’re navigating NICs increases, CGT strategies, or IHT planning.
FAQs on Autumn Budget 2024 for Small Business Owners
How does the NIC increase impact my business?
The rise in NICs raises employment costs, particularly for low-wage employees, and may influence recruitment strategies.
What are the best ways to handle the CGT rise?
Strategic timing of sales or restructuring can help manage CGT liabilities as rates increase.
How can I benefit from the Employment Allowance?
Small businesses can now claim up to £10,500 from 6 April 2026, reducing NIC costs and freeing up capital for reinvestment. Larger busineses will also be able to benefit from the Employment Allowance too, so don't forget to claim it!
Will the National Living Wage hike affect my payroll costs?
Yes, the 6.7% increase will raise costs, particularly for minimum-wage positions, impacting payroll budgeting. If you operate a salary sacrifice scheme (possibly for staff pensions) you need to be particular careful to ensure you comply with the minimum wage.
What relief options are available for smaller employers?
Alongside Employment Allowance increases, business rates relief in certain sectors offers support.
Contact Us
Want to discuss how the Autumn Budget 2024 affects your business?
Contact Giraffe Accountants at Giraffe Accountants Ltd.
