What the 2024 budget means for small businesses in the UK

With Labour already ruling out tax rises for workers, businesses were braced for the worst as Rachel Reeves took to the podium to deliver her inaugural budget and Labour’s first budget for 14 years.

Reeves began by setting out Labour’s mission to “restore economic stability” and fix the foundations in order to deliver change through “responsible leadership”. With a raft of measure that have raised taxes by £40bn, let’s take a closer look at what the 2024 budget means for small businesses across the country:

• The lower rate of Capital Gains Tax will be raised from 10% to18% and the higher rate from 20% to 24%. CGT on residential property will remain at 18% and 24%.
• Business Asset Disposal Relief will remain at 10%, rising to 14% in 2025, before increasing again to 18% in 2026. The lifetime limit for Business Asset Disposal Relief will remain at £1m.
• Increase in National Living Wage by 6.7% to £12.21 an hour from next April. There will also be a move towards a single adult rate which will be phased in over time to bring all workers in line regardless of their age. Workers aged between 18-20 years old will see an increase from £8.60 to £10, while apprentices will get the biggest pay rise from £6.40 to £7.55.
• The rate of employers National Insurance Contribution will increase by 1.2 percentage points from 13.8% up to 15% April. This is anticipated to raise £25bn.
• In an effort to help small businesses with the increase in employers National Insurance, the earnings threshold which businesses start to pay employers NICs will be lowered from £10,500 down to £5,000 per year. This means 865,000 businesses will pay no employers National Insurance next year . Reeves claimed this would allow a small business to employ four full-time workers on the National Living Wage without having to make employers National Insurance Contributions.
• To help high streets, there will be a 40% relief on business rates for retail, leisure and hospitality businesses in 2025-26 up to a maximum discount of £110,000 per business. This replaces the current discount to business rates which will expire in April.
• Fuel duty will continue to be frozen, while the temporary 5p deduction which is already in effect, will also be extended for another year.
• There will be an increase to the interest rate which is levied on HMRC tax debt. This is a measure which is predicted to raise £6.5million.
• Abolishment of non-dom status from April 2025, meaning those who make the UK their home will pay their taxes here.
• There will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions of the previous government. From 2028-29, personal tax thresholds will be uprated in line with inflation once again.
• Reeves also announced the appointment of a Covid Corruption Commissioner to help uncover – and recover – money fraudulently obtained through various Covid-19 schemes and contracts during the height of the pandemic.