Autumn Budget 2024: How changes will affect your business 

On 30^th October 2024, the UK Government presented its annual Autumn Budget, outlining its financial plan for the next few years. In this article, we provide an overview of the announcements that are most likely to affect you as an SMB, along with their possible implications. 

Regardless of the type of business you run, the changes highlighted here are those most likely to affect your finances and operations.  

You can view the official policy documents for the Autumn Budget here, though if you’d like more clarification on exactly how the changes will impact your unique circumstances, it’s best speak to your accountant. 

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Making Tax Digital (MTD) for Income Tax 

The Budget confirmed that Making Tax Digital (MTD) for Income Tax will proceed and that the previously announced dates have not changed.  

This means that, from April 2026, taxpayers with a combined gross income (before expenses) from self-employment and/or property over £50,000 will be required to comply with the requirements. Then, from 2027, this extends to those with income above £30,000. 

The Budget also stated that the threshold will lower a second time to £20,000 at some point before the next general election in 2029, with precise timing of this to be confirmed at a later fiscal event. 

“Now that we have confirmation of the Making Tax Digital for Income Tax roadmap, sole traders and landlords and their agents can start making plans for this change with the certainty it’s worth their effort. Whilst MTD is essentially a tax measure, software adoption and digital record keeping have the power to transform businesses through automation and collaboration with their agent and ultimately result in reduced administrative burden and fewer errors.

“While I firmly believe that digital record keeping will benefit businesses longer term, the MTD requirements will take some time to get used to so I would strongly encourage impacted taxpayers and agents to join the MTD pilot ahead of mandation. This will give them the time to test the functionality out and embed new processes in a more controlled way before the requirements formally come into effect.“

Jess Jensen, Product manager for compliance knowledge, Sage 

Tax changes  

These are some of the most relevant changes in the Budget for small business owners to consider: 

Capital Gains Tax (CGT) 

The lower rate of CGT will increase immediately, from 10% to 18%, and the higher rate from 20% to 24% from 30^th October 2024. For Business Asset Disposal Relief and Investors’ Relief, the rate will gradually rise to 14% from April 2025 and match the main lower rate of 18% from April 2026. 

If you are planning to sell business assets, these changes may result in higher tax liabilities. It’s advisable to review your asset disposal plans with your financial adviser and consider the timing of any sales to manage the impact of these increased rates. 

Business Asset Disposal Relief (BADR), known as Entrepreneurs’ Relief before April 2020 and Investors’ Relief (IR) will increase to 14% from 6 April 2025, and will match the main lower rate of 18% from 6 April 2026.  

Corporation Tax roadmap 

The Government has committed to capping the rate of Corporation Tax at 25% for the duration of the Parliament. This should make it easier to plan and make investments, with more predictability of your tax liability over a longer time period. 

Income Tax 

There will be no changes to Income Tax rates or thresholds. The budget confirmed that the previous government’s freeze on Income Tax and National Insurance Contributions will not be extended, and that these personal thresholds will be uprated in line with inflation from April 2028. 

This should positively impact the amount of tax that both self-employed small business owners and employees are liable to pay when it comes into effect. 

Capital allowances 

The Government will extend for a further year to 31 March 2026 for Corporation Tax purposes and 5 April 2026 for Income Tax purposes: 

• the 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars  

• the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle charge points.  

The Government will also explore extending full expensing to assets bought for leasing or hiring, when fiscal conditions allow. 

These incentives make it more financially viable to invest in electric vehicles, supporting sustainability goals and potentially reducing operational costs. 

Stamp Duty Land Tax 

From 31 October 2024 the Higher Rates for Additional Dwellings (HRAD) surcharge on Stamp Duty Land Tax (SDLT) will be increased by 2 percentage points from 3% to 5%. This means, if you purchase additional properties—either for your business, or as a landlord—you will be liable to pay a higher rate of tax. It will also impact you if you already own a residential property and are acquiring additional residential properties. 

Fuel duty freeze 

To mitigate against rising costs, fuel duty will be frozen at current levels for one year. The 5p cut will be extended for a further 12 months and will no longer be increased in 2025 to 2026 in line with inflation, which was the plan under the previous government.  

This will provide savings for any business with fuel expenses, as well as benefitting employees by saving the average car driver £59 in 2025 to 2026. 

Support for retail, hospitality, and leisure 

The Budget also introduces several changes to support the retail, hospitality, and leisure sectors specifically, aimed at strengthening UK high street businesses. 

This includes two changes to business rates: 

• Permanent lower multipliers. From 2026-27, retail, hospitality, and leisure properties will benefit from permanently lower business rates multipliers. 

• Relief for small businesses. For 2025-26, the small business multiplier will be frozen, and retail, hospitality, and leisure businesses will receive 40% relief on their bills, up to a £110,000 cash cap. 

These changes aim to reduce the financial burden on small businesses within the sector, with relief measures helping them to manage costs and support business sustainability. 

Revised alcohol duty 

Alcohol duty on draught products will be reduced by 1 penny per average-strength pint, effective from February 2025. Additionally, the Government will remove mandatory duty stamps for spirits. 

If you operate in the brewing or pub industry, these changes should reduce your operational costs and support your business’s financial health. 

Payroll changes 

Pay As You Earn (PAYE) 

Several PAYE conditions remain unchanged, including The Personal Allowance remaining at £12,570, and PAYE tax thresholds for English, Welsh, and Northern Irish taxpayers staying the same. 

The Scottish and Welsh governments will publish their own budgets in December. The Scottish update will include tax thresholds and tax rates, and the Welsh update will include only tax rates. 

The only notable change announced, is that The Personal Allowance and PAYE tax thresholds will be uprated with inflation from 2028/29. 

Employer National Insurance Contributions (NICs) 

Thresholds for National Insurance will start rising in line with inflation from April 2028. 

The rate of employers’ NICs will increase from 13.8% to 15%, effective from April 2025. Additionally, the threshold at which employers start to pay NICs (known as the secondary threshold) will be reduced from £9,100 to £5,000 per year. This makes it less than the Lower Earnings Threshold (where an employee becomes liable to pay Employee NICs), which is being raised to £125 per week. 

These changes will increase the cost of employing staff and could have an impact on business cashflow. However, to support smaller businesses, the Employment Allowance (which allows eligible employers to reduce their NIC liability) will be increased from £5,000 to £10,500, and the £100,000 eligibility threshold will be removed. This will help small businesses offset the increased NICs costs. 

The employer NI relief for hiring qualifying veterans was extended an additional year until 5 April 2026. 

National Living and Minimum Wage 

Businesses will have to consider the following changes to both the National Living Wage and National Minimum Wage: 

• The National Living Wage will increase to £12.21 from 1st April 2025, for employees aged 21 and above. 

• The National Minimum Wage rate for employees aged 18-20 will increase to £10.00. 

• The National Minimum Wage rate for employees aged 16-17 will increase to £7.55. 

• The National Minimum Wage rate for apprentices will increase to £7.55. 

“Businesses will need to plan for combined effects on their cash flow that the increases in minimum wages and the revised rates of employer NICs will have. If you’re a smaller business, these will be at least partly mitigated as your Employment Allowance will double. In any case, I’d advise talking to your accountant about these changes, so they can help you make decisions that maintain the financial health of your business.” 

Joanne Pringle, Product manager, HR and Payroll, Sage

Benefits in Kind (BIK) 

The Budget confirmed that payrolling of benefits in kind will become mandatory from April 2026 (with the exception of beneficial loans and accommodation). These are benefits that employees and directors receive that are not directly part of their salary, like a company car, private health insurance, or a gym membership. 

“This change will mean employers will need to process these benefits and the tax on them through the payroll on a regular basis rather than annually via the existing “P11D” form as can be done now. Employers will also need to pay Class 1A liability each month, rather than an annual lump sum. These changes in process for employers will likely take some time to embed for those not doing it today.” 

Steven Watmore, Product manager, HR and Payroll, Sage  

E-invoicing 

The Budget confirmed that the Government will launch a consultation on e-invoicing standards and how to encourage adoption in early 2025. This indicates a similar trajectory to many leading tax authorities globally.  

Whether the 2025 UK consultation will result in mandating the use of e-invoicing or not, the adoption of e-invoicing is set to bring a wide range of benefits to SMBs, as it will help to automate laborious manual processes and make it easier and faster to get paid. 

HMRC investment 

The Autumn Budget also unveiled plans to invest significantly in both personnel and technology to support HMRC. Though these plans may impact your business directly in a few ways, they’ll likely have a more significant effect on accountants. 

There are two main areas of investment: 

1. HMRC compliance staff. Over the next 5 years HMRC will recruit an additional 5,000 compliance staff, which should relieve pressure for taxpayers and accountants and their teams to speak to HMRC and get problems solved quicker. 

2. Debt recovery. HMRC will also recruit an additional 1,800 debt recovery staff, acquire credit reference agency data, modernise debt management IT systems, and facilitate voluntary pre-payment of tax.  

As well as these investments, the Government will publish a consultation in early 2025 on modernising how HMRC acquire and use third-party data to make it easier for taxpayers to get tax right first time. 

Final thoughts 

The UK Autumn Budget 2024 introduced measures that present both challenges and opportunities for SMBs, particularly with changes in tax policies and Employer National Insurance Contributions. 

At the same time, the Budget includes several freezes intended to foster stability and predictability over the next five years, helping businesses plan for the future. 

Aimed at restoring economic stability and fuelling growth, the Government’s Budget further emphasises the digitalization of the economy. This initiative encourages SMBs to adopt technology that will enhance adaptability and resilience, equipping them to navigate future changes and challenges. 

“Now, more than ever, SMBs need to leverage digital tools to boost productivity and profitability. I’m encouraged by the Government’s commitment to the digital economy with initiatives like Making Tax Digital and e-invoicing. These are vital steps toward building a resilient, future-ready economy.”

Steve Hare, CEO, Sage

As with any legislative changes, it’s important to stay up to date and assess if any of your plans need to be adjusted. While this article and the full Autumn Statement policy from the UK Government can help you with this, working directly with your accountant will give you more confidence in any decisions you need to make.