The 2024 UK Budget and Small Businesses

31 October 2024

The Key Takeaways

The 2024 UK budget was announced on October 30th 2024. It is the first budget of the Labour government in 14 years. The budget includes a number of measures that will affect small businesses.

Key announcements in the budget for small businesses include:

  • A rise in employer National Insurance contributions: From April 2025, employers will pay 15% in National Insurance on their employees, a rise of 1.2 percentage points.
  • An increase in the employment allowance: The amount employers can claim back from their National Insurance bill will increase from £5,000 to £10,500.
  • Capital gains tax increase: The lower rate will rise from 10% to 18% and the higher rate from 20% to 24%.
  • Permanent relief on business rates: A permanent 40% discount on business rates for retail, hospitality, and leisure businesses will replace the current 75% discount.
  • Corporate tax roadmap: Corporation tax will be capped at 25% for the duration of this parliament.
  • Other measures: Fuel duty frozen for another year, inheritance tax exemption for the first £1m of combined business and agricultural assets from April 2026, alcohol duty changes, and continued R&D relief.

Additionally, the budget confirmed that there will be no rise in income tax, VAT, or employee National Insurance, and the minimum wage will increase to £12.21.

How can small businesses prepare for the changes in the budget?

There are a number of things that small businesses can do to prepare for the changes in the budget. These include:

  • Understanding the impact of the announcements: It is important for small businesses to understand how the changes in the budget will affect them. This can be done by reading the government’s budget documents and talking to accountants or other financial advisers.
  • Taking advantage of current reliefs: Small businesses should make sure that they are taking advantage of any current reliefs that they are eligible for. For example, small businesses may be eligible for business rates relief or R&D tax relief.
  • Preparing for new business rates: Small businesses should prepare for the introduction of new business rates. This may involve reviewing their property valuations and making sure that they are paying the correct amount of business rates.
  • Exploring R&D relief: Small businesses that are involved in research and development should explore the tax relief that is available to them. R&D tax relief can significantly reduce the cost of research and development.

Additional resources

The following resources can provide further information about the 2024 UK budget and what it means for small businesses:

  • HMRC website
  • Federation of Small Businesses website
  • Institute of Chartered Accountants in England and Wales website

Time to Prepare

The 2024 UK budget includes a number of measures that will affect small businesses. It is important for small businesses to understand the impact of these changes and to take steps to prepare. By doing so, small businesses can ensure that they are well-positioned to succeed in the years ahead.

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