Autumn Budget 2024: Key Insights for SME Business Owners

The Autumn Budget 2024, unveiled by Rachel Reeves, introduces significant fiscal measures that will directly affect small and medium-sized enterprises (SMEs) across the UK. Here’s a breakdown of the key elements and their implications for your business.

Tax Changes and Adjustments

1. Employer National Insurance Contributions (NIC): The rate for employers will increase by 1.2%, bringing it to 15%. Additionally, the threshold for paying this rate will drop from £9,100 to £5,000 of earnings. However, the NIC Employers Allowance will rise from £5,000 to £10,500, offering some relief.
2. Capital Gains Tax: The lower rate will increase from 10% to 18%, and the higher rate from 20% to 24%. This change is effective immediately and will impact the sale of business assets.
3. Business Asset Disposal Relief: While the £1 million limit is retained, the tax rate will increase to 14% next April and 18% the following year.
4. Stamp Duty Land Tax: The surcharge on additional dwellings will rise from 3% to 5% starting tomorrow.
5. VAT on Private School Fees: From January 2025, VAT will be applied to private school fees, and business rates relief for these schools will be removed from April 2025.

Corporate and Business Taxation Details

• Corporation Tax: A new Corporate Tax Roadmap has been published, capping the rate at 25% for the duration of this parliament. The Annual Investment Allowance and Full Expensing will be retained, providing some stability for business planning.
• Non-DOM Regime: The current regime will be replaced by a new residency-based system from April 2025, affecting international business owners and investors.

Other Financial Measures

• Electric Vehicle Incentives: Tax incentives for electric vehicles will continue until 2028, encouraging businesses to invest in sustainable transport options.
• Business Rates Relief: From 2025, retail, hospitality, and leisure properties will benefit from a new 40% relief, replacing current temporary measures.

Missing Support for SMEs

• With the increased Employer National Insurance Contributions: The rise in employer NICs from 13.8% to 15% will directly impact SMEs’ labour costs, potentially hindering their ability to hire or expand their workforce.
• With the Capital Gains Tax Hike: The increase in Capital Gains Tax rates, as highlighted by a recent survey from Beauhurst, will significantly impact business owners who sell assets or shares, potentially discouraging investment and entrepreneurship. This potential hike could diminish financial incentives for business owners and investors, leading to a decline in funding for UK startups and small businesses. Such a scenario threatens to cripple the UK’s entrepreneurial ecosystem, stifling innovation and economic growth.
• Lack of Export Support: The budget did not include specific measures to support SMEs engaged in international trade despite their crucial role in economic growth.
• Limited Relief for Energy Costs: While some support for energy costs remains, concerns persist about the long-term impact on SMEs, particularly in energy-intensive sectors.

Why SME Support is Crucial

• Economic Backbone: SMEs are the backbone of the UK economy, contributing significantly to GDP, employment, and innovation.
• Job Creation: SMEs are major job creators, particularly for young people and those in disadvantaged areas.
• Local Communities: SMEs often play a vital role in local communities, providing goods and services and supporting local economies.
• Innovation: SMEs are often at the forefront of innovation, driving economic growth and creating new industries.

Business owners should stay informed and seek professional advice to navigate these changes effectively.