The Chancellor of the Exchequer presented her Autumn Budget on 30th October and there are several areas which will impact the small business community.
The following details the top 4 items that have been introduced and what these changes will mean to an SME.
- Employer national insurance (NI) contributions
From April 2025, the rate of employer NI will increase by 1.2 percentage points, raising it to 15%. There will also be a drop in the threshold for when employers must start paying NI, it will decrease from £9,100 to £5,000. The impact of this is that it could significantly affect payroll costs for businesses with multiple employees.
On a more positive note, and to support smaller companies, the Government has raised the employment allowance from £5,000 to £10,500. This means many small businesses (believed to be over 860,000 companies) will be able to reduce or avoid NI liability altogether.
- Minimum wage increase
The national living wage for all workers aged 21 and over will rise to £12.21 per hour in 2025, with similar increases for younger workers. While beneficial for employees, this increase may create cost implications for small businesses, especially for those already having to adapt to the rise in NI costs.
- Business rates relief
Support has been extended to the retail, leisure and hospitality sectors by reducing business rates. Originally the relief was 75% but with a specific expiration date however, this is changing to a permanent 40% discount capped at £110,000 annually. The hope is this will ease financial burdens on high street businesses who face strong competition from online retailers.
- Corporation tax stability
Corporation tax will remain capped at 25% with the hope that this will bring stability and make the UK’s corporate tax one of the lowest of the G7. The cap was agreed to support investment and growth due to the predictability of knowing tax commitments.
Aside from what we perceive as the top 4 influential changes there are also some other notable items.
- The Government have advised that they are looking at investments to be made for improving the customer service experience provided by HMRC. A key target being that 85% of calls will be answered when somebody wants to speak directly to a member of the team. Alongside this will be the transformation of becoming a ‘digital first’ organisation for which a transformation roadmap will be published in Spring 2025. The overall aim is to modernise and reform the HMRC through internal system improvements and enhanced customer engagement.
- Personal tax thresholds (when people must pay tax) will increase in line with inflation from April 2028.
- All inheritance tax thresholds will continue to be frozen until 2030. However, any inherited pension pots will be subject to inheritance tax from April 2027. There will also be some items reformed in April 2026 which include the agricultural property relief and the business property relief.
- For businesses operating in the retail, hospitality and leisure sectors then business rates on properties in England will be permanently lower from 2026-27.
- Fuel duty will again be frozen for the remainder of 2024 and all of 2025. This means a reduction in 5p, so predictions are that it saves an average car driver £59.
- From 1st October 2025, and to support small businesses with late payment of invoices, any companies bidding for government contracts over £5m per annum will be excluded if they have a history of taking longer than 45 days to pay their suppliers.
- The British Business Bank will allocate around £1billion across 2024-25 and 2025-26 for access to finance for small businesses.
- Focus continues to be on making tax digital regarding income tax for self-assessment.
- Making tax digital will continue to be pushed for income tax on self-assessment. April 2026 will see the self-employed and landlords with income over £50,000 needing to submit quarterly tax reports to HMRC, however this has also been updated for income of £30,000 to £50,000.
- It is likely that new standards will be established to encourage and adopt electronic invoicing across the small business community.
Should you have any questions or would like to know more about the Autumn Budget then our team would be very happy to help. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.
You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min
