Insights | Accounting, Budget, Tips

How the 2024 Autumn Budget will affect you and your business

Firstly, congratulations to, Rachel Reeves, on being the first female chancellor to have deliver the budget. With this being labours first budget in 14 years their sights are firmly set on driving economic growth and stability. Here at Accounting Solutions, we thought it would be good to outline some of the key changes that may affect your business.

Significant Changes to Employer’s National Insurance

Starting from April 2025, employers will pay National Insurance (NI) on employees’ earnings from a lower threshold and at a higher rate, following changes announced by the Chancellor. Additionally, the Chancellor has announced an increase in the Employment Allowance, which currently offers NI relief for eligible small employers, raising it from £5,000 to £10,500. The upper threshold for NI contributions will also be removed.

Employers NI – a rise in the rate
Employers national insurance that is payable by employers must be paid to HMRC in respect of their employees’ wages – this will rise from 13.8% to 15% from 6th April 2025.

A reduction in the threshold
As of April 6, 2025, the earnings threshold for employer National Insurance (NI) contributions will be lowered from £9,100 to £5,000. This change means employers will be subject to the new, increased rate on a larger portion of their employees’ earnings. Resulting in larger wage bills.

Employment Allowance
At present, businesses with employer National Insurance (NI) bills of £100,000 or less from the prior tax year can reduce their employer NI contributions by £5,000. However, from April 2025, the government plans to increase this allowance to £10,500 and eliminate the £100,000 eligibility cap. Limited companies that pay employer NI solely on the wages of one employee will continue to be ineligible for the Employment Allowance if that employee also serves as a company director.

National Minimum Wage Increase

The national minimum wage will rise in April 2025 from £11.44 to £12.21 for those that are over the age of 21. For employees between the ages of 18 to 20 the rate will increase from £8.60 per hour to £10.

Higher Interest Rates on Overdue Tax Payments

Interest on overdue tax payments applies to unpaid balances for taxes like Income Tax, Capital Gains Tax, and certain National Insurance contributions if not settled by the due date. Currently, the interest rate is set at the Bank of England’s base rate plus 2.5%, totalling 7.5% at present. Starting April 6, 2025, this rate will rise by 1.5 percentage points, becoming the base rate plus 4%, as part of the Government’s efforts to reduce the tax gap.

Corporation Tax

A Corporate Tax Roadmap has been released, outlining future plans for corporation tax and several other taxes. Key points include maintaining a maximum corporation tax rate of 25% throughout the current parliamentary term, preserving the small profits rate and marginal relief at their existing levels and thresholds, and retaining permanent full expensing, the £1 million annual investment allowance, and R&D tax reliefs.

Making Tax Digital for Income Tax

The government has pledged it continued commitment to implement Making Tax Digital for Income Tax (MTD IT), which will require eligible businesses and landlords to keep digital records and report to HMRC quarterly from April 2026. 

Starting in April 2026, MTD IT will apply to self-employed individuals and landlords with qualifying income (not profit) above £50,000, extending to those with qualifying income over £30,000 in April 2027. Additionally, the Chancellor announced that individuals with incomes over £20,000 would also be included by the end of the current parliamentary term, expected no later than 2029. The timeline for this final group will be confirmed at a later date

Instant Hikes in Capital Gains Tax & Adjustments to Available Reliefs

Starting October 30, Capital Gains Tax (CGT) rates are set to rise: the lower rate will move up from 10% to 18%, and the higher rate will increase from 20% to 24%. These adjustments will bring all assets into line with the existing rates on residential property, which will continue at 18% and 24%.

The two reliefs that currently offer reduced CGT rates, Business Asset Disposal Relief (BADR) and Investors’ Relief (IR), will undergo gradual rate increases, giving business owners and investors time to adapt. For disposals made on or after April 6, 2025, the CGT rate on BADR and IR will rise from 10% to 14%, with a further increase to 18% for disposals made on or after April 6, 2026.

Reeves also revealed that the government intends to raise CGT rates on carried interest—a performance-based reward for fund managers—to 32% starting April 2025, with additional reforms planned for April 2026.

Changes to Tax Rules on Liquidations of LLPs

Starting October 30, the government is revising the tax treatment of capital gains when a Limited Liability Partnership (LLP) is liquidated, particularly when assets are transferred to a contributing member or an associated individual. However, the specific details of these changes were not clarified in the Budget.

Close Company Loans to Shareholders

The government has said that it plans to remove “opportunities to side-step the anti-avoidance rules” when shareholders take loans from close companies. However, the report does not provide further details on what form these changes will take.

Extending 100% First Year Allowances for Zero Emission Cars

The budget will extend the 100% First Year Allowances (FYA) for eligible spending on zero-emission vehicles for an additional year. As a result, these allowances will now be available until 31 March 2026 for Limited Companies and until 5 April 2026 for sole traders and partnerships.

Double-cab Pick-ups are Confirmed as Cars for Certain Tax Purposes

Starting 1st April 2025 for Corporation Tax and 6th April 2025 for income tax, double cab pick-up vehicles (DCPUs) will be classified as cars. This means that for capital allowances, benefits in kind, and certain deductions from business profits, DCPUs will be treated like cars. However, for VAT purposes, we believe that they will still be considered vans, meaning that VAT could still be reclaimed when purchasing one.

Conclusion

Tax rules and allowances change regularly, so it’s important to stay ahead of the latest developments. Our experienced accountants in Manchester can help you understand how Budget changes affect your business and identify opportunities to reduce your tax liability. Call Accounting Solutions Manchester today on 0161 879 7175 for a free, no-obligation consultation.