Rachel Reeve’s 2024 Autumn budget was highly anticipated, with many businesses waiting with bated breath to see the impact this would have on their ability to continue to invest and grow. Of course, there was no magic bullet announced, however UK businesses now have some level of certainty as to what the next few months, even years will hold. Whatever your political opinions, increased certainty will hopefully improve confidence amongst businesses to implement growth plans.
The key takeaway points for businesses during the Budget are:
Wages
The minimum wage officially known as the National Living Wage is set to increase to £12.21 an hour from April 2025, previously £11.44, for over 21 year olds.
For 18-20 year olds the National Minimum Wage will increase from £8.60 to £10.00.
The wage is also increasing for 16-17 year olds up to £7.55 from £6.40.
The Impact
This will have a significant impact on the costs of employment, potentially deterring business owners from recruiting, instead opting to work more hours themselves to save costs.
Main Rate Corporation Tax
Main rate of Corporation Tax to stay at 25% until next election for those business whose profits are over £250,000
The Impact
The certainty of the Corporation Tax rate should give businesses some level of confidence to push forward with investment and growth, without fear of being taxed more.
National Insurance
The National Insurance Threshold has been lowered to £5,000 from £9,100 and the percentage at which this is paid has increased from 13.8% to 15%.
The Employment Allowance has been increased from £5,000 to £10,500
The Impact
This will significantly increase National Insurance costs for many businesses.
Whilst directors may benefit from being paid Dividends – avoiding National Insurance costs, it is worth, particularly with smaller businesses, ensuring that the Employment Allowance is fully utilised.
First Year Allowances and Company Cars
The First Year Allowances, Annual Investment Allowance & Full Expensing are continuing, and equipment purchased on hire purchase agreements still qualify for these allowances. Find more details here.
Double cab pick-ups, previously classified as commercial vehicles will be classified as cars from April 2025, so will only qualify for Capital Allowances at 6%.
Benefit in Kind on electric cars has increased by 2% and by 1% on all other company cars.
Of course this is just a summary of the key points applicable to UK businesses, but there were many other points covered, including the reduction in Alcohol Duty which will see a pint cost £0.01 less! As businesses of all shapes and sizes navigate the next few months following these announcements, we would love to discuss your plans, challenges and successes with you – so give us a call.