Key Takeaways for Small Business Owners from the 2024 Budget

The Chancellor, Rachel Reeves, has made waves with her latest budget announcement, promising to "invest, invest, invest." For small business owners, these changes can be both opportunities and challenges. With so much to unpack, we’re here to guide you through the highlights and how they might affect your business. 

1. Major Changes to Employer’s National Insurance

Beginning in April 2025, small business owners will need to adjust their payroll strategies. The threshold for an employer's National Insurance (NI) will drop while the rate increases. However, there’s a silver lining. The Employment Allowance will see a significant increase, which can help ease the financial burden.

2. A Rise in Employer NI Rate

From April 2025, the Employer NI rate will rise from 13.8% to 15%. This change means businesses need to budget for higher NI contributions for each employee. Prepare by reviewing your current staffing budgets and forecasting any potential impact.

3. Lower Threshold for Employer NI

Currently, Employer NI is paid on earnings over £9,100, but from April 2025, this will decrease to £5,000. With a larger proportion of wages subject to NI, it’s crucial to strategise effectively.

4. Increased Employment Allowance

Good news! The Employment Allowance will rise to £10,500, offering more relief for small businesses dealing with increased Employer NI costs. This change broadens eligibility, making it crucial to review your finances to maximise benefits.

5. Renewed Commitment to Making Tax Digital (MTD)

The Government is pushing forward with Making Tax Digital for Income Tax (MTD IT). By 2026, self-employed individuals and landlords with qualifying incomes will need to maintain digital records. With this shift to digital, now’s the perfect time to familiarise yourself with compatible software.

6. Increased Interest Rates for Late Tax Payments

To close the tax gap, interest rates on late tax payments will increase from April 2025. This underscores the importance of timely tax submissions to avoid incurring additional costs. Use this as motivation to stay ahead of deadlines.

7. Immediate Increases to Capital Gains Tax

Starting 30th October, the lower rate of Capital Gains Tax (CGT) rises from 10% to 18%, and the higher rate from 20% to 24%. These adjustments necessitate a strategic approach to asset management.

8. Introducing Advanced Electronic Signatures

From April 2025, tax advisers must use Advanced Electronic Signatures for certain tax refund claims. While it’s unclear which claims this applies to, staying prepared is a key.

9. Extending 100% First Year Allowances for Zero-Emission Cars

The extension of 100% First Year Allowances for zero-emission cars means businesses can continue to benefit until 2026. Consider this a chance to incorporate eco-friendly vehicles into your fleet.

Navigating the latest budget changes can feel overwhelming. If you have any questions or need guidance, we're here to help make sense of it all and ensure you're making the most of these changes. Feel free to reach out to us with your queries!