What the Autumn Budget 2024 means for small-business owners & the self-employed
The 2024 Autumn Budget from Labour represents a considerable turn after 14 years of Conservative leadership.
On October 30th, 2024, Rachel Reeves, Chancellor of the Exchequer, outlined the government’s tax and spending plans for 2025. Positioned by Reeves as a Budget she does not want to see a repeat of, the new plan includes notable increases to tax, amounting to a total of £40 billion.
To help you navigate the Budget as a small-business owner or self-employed individual, we have put together a simplified guide of what may affect you.
Business rates
If your small business does not qualify for small business rates relief, a multiplier is used alongside your rateable value to calculate your business rates bill. The new Budget outlines that this multiplier will now be frozen at 4.49p as of next year, remaining lower than the standard multiplier of 5.12p, continuing to benefit small businesses and the self-employed by providing relief to their tax bills.
Employers’ national insurance
Employers’ national insurance will rise by 1.2% from 13.8% to 15% from April 2025, foreseeing a financial strain on small companies. Placing small businesses at a disadvantage, Elite Business shares how this increase in national insurance may see businesses pulling financial resources from elsewhere, potentially forcing some to reduce employee pay or cut down on their number of staff.
Employment allowance
Employment allowance will rise from £5,000 to £10,500, an announcement set to help small businesses with the spike in employers’ national insurance. This increase in employment allowance will help small businesses reduce their cost of employment, allowing employers to reinvest funds into hiring and training. Labour have claimed this will result in 865,000 employers not paying national insurance at all next year, and over one million paying the same or less than they previously have.
Capital gains tax
Capital Gains Tax (CGT) will see an increase from the rate of 10-18%, to the higher rate of 20-24%, with immediate effect. If you’re a self-employed sole trader or in a business partnership, you will now need to pay a higher CGT if you make a profit when you sell or ‘dispose’ of all or part of a business asset, a financial implication which may see small business owners suffer from the sale of their assets.
The update to Business Asset Disposal relief sees a 40% increase in the tax rate applying to the first £1,000,000 of disposal proceeds for qualifying business owners from April 2025, a significant increase in tax paid out.
Minimum wage
The “national living wage” will now see an increase of 6.7% to £12.21 for those over 21, followed by those 18-20 seeing their minimum wage increase from £8.60 to £10, and apprentices seeing £6.40 rise to £7.55. This, combined with the increased employers’ national insurance, is set to see small businesses experience an increase in their employee costs.
Since the announcement of the Budget last week, there has already been calls for small businesses to receive more help; Michelle Ovens, founder of Small Business Britain, has warned more and more will fail if this pressure continues.
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