October 2024 Budget Update
What Small Business Owners need to know
The October 2024 budget announced by the Chancellor gave rise to lots of changes for small business owners. Read on to find out how your business could be affected.
Changes to the National Living Wage
The following changes to the National Minimum Wage which will apply from the 1st April 2025:
• National Living Wage (21 and over): up by 77p to £12.21 per hour
• 18-20 Year Old Rate: up by £1.40 to £10.00 per hour
• 16-17 Year Old and Apprentice Rate: up by £1.15 to £7.55 per
Increase in Employer’s NICs
There are two main changes to Employer NICs:
• From 6th April 2025:
o Employer National Insurance Contributions are now payable for employees with a salary over £5,000 (previously £9,100);
o The rate of Employer NICsare going up from 13.8% to 15%
HOWEVER
• Employment Allowance is increasing from £5,000 to £10,500
• There is a good chance that your Employer NIC bill may go down from the 6th April 2025
Trade as a single director/shareholder through a limited company with no employees?
• Sadly you are not eligible for Employment Allowance, and only employers with 2 employees earning above the Secondary Threshold are eligible
• This means that if you take a salary of £12,570 per year, your Employers' NI contributions will go up from £479 to £1,134 per year
Capital Gains Tax Changing – with immediate effect
Capital gains tax: lower rate increases from 10% to 18%, higher rate increases from 20 to 24%
Capital Gains Tax rates for Business Asset Disposal Relief, i.e. selling your business, and Investors' Relief, i.e. investing in other businesses, will rise gradually to 14% from 6 April 2025 and match the main lower rate of 18% from 6 April 2026, to allow business owners time to adjust to the changes.
Business Taxes
No changes to Corporation Tax, VAT or income tax rates or thresholds
More help for the retail, hospitality and leisure sector. Businesses in this sector from April 2025 will:
o have their small business multiplier frozen for a year
o benefit from 40% reduction in their business rates (it was a 75% reduction
HMRC is increasing its team to get more tax paid
The government is recruiting an additional 5,000 compliance staff - with the first 200 starting training in November - and providing funding for 1,800 debt management staff.
The government is also committed to taking stronger action on tax fraud, including by expanding HMRC's criminal investigation work and legislating to prevent abuse in non compliant umbrella companies.
