Autumn Budget 2024: Summary

The Autumn Budget has unveiled several policy changes and tax modifications that impact tax payers at various levels, including the National Minimum Wage, inheritance tax, and business rates. Below is a concise overview of the key updates for business owners.

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Wage and Allowance Changes

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Increase in National Minimum Wage

Effective April 6, 2025, the National Minimum Wage for individuals aged 21 and older will rise to £12.21 per hour, reflecting a 6.7% increase from £11.44. The minimum wage for workers aged 18-20 will also increase to £10 per hour, aimed at supporting younger employees in a challenging economic landscape.

Carer’s Allowance Increase

The allowance for carers will increase to £81.90 per week, based on 16 hours at the National Minimum Wage, enabling them to earn over £10,000 annually.

Expanded Employment Allowance for Small Businesses: Starting April 2025, the Employment Allowance will be raised to £10,500 and will now be accessible to all small businesses, eliminating the previous £100,000 threshold requirement. This change provides businesses with greater flexibility and a more substantial reduction in employer National Insurance contributions, thereby easing staffing expenses.

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Tax Modifications

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Fuel Duty Freeze

The government has opted to freeze fuel duty for this year and the following year, ensuring stability for businesses that depend on fuel for logistics.

National Insurance Contributions (NIC)

• Employees: NIC rates for employees will remain unchanged.
• Employers: Starting April 2025, the rate will increase by 1.2% to 15%, while the secondary threshold will drop from £9,100 to £5,000, affecting payroll costs for businesses.
• Self-Employed: There are no announced changes to NIC for the self-employed.

Capital Gains Tax (CGT) Adjustments

Capital Gains Tax rates will rise from 10% to 18% and from 20% to 24%, effective immediately. Business Asset Disposal Relief (BADR) will stay at 10% for gains up to £1 million, but will increase to 14% on April 6, 2025, and to 18% on April 6, 2026.

Corporate Tax Rate

No modifications were made to the corporate tax rate, which remains at 25%.

Inheritance Tax (IHT) Updates

• The tax-free threshold stays at £325,000, and with property, it will rise to £500,000, extending through 2030.
• Inherited pensions will now be included as part of the estate, closing existing loopholes.
• Changes to Agricultural and Business Property Relief (APR & BPR) will introduce a £1 million exemption, with assets exceeding this amount qualifying for only 50% relief. AIM shares will also be eligible for 50% relief at a 20% rate starting immediately.

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Additional Business Insights

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Tax Classification Change for Double Cab Pickups (DCPU)

Included in the budget report, double cab pickups will be reclassified as cars for tax purposes beginning April 2025, reversing the prior classification as vans. This change means DCPUs with a payload of one tonne or more will incur higher tax rates, impacting capital allowances and benefits-in-kind for both corporation tax and income tax. DCPUs purchased or leased before April 2025 can continue with the previous tax treatment until 2029, but this shift may affect businesses using DCPUs for both commercial and personal uses.

Business Rates Relief

The retail, leisure, and hospitality sectors will enjoy a 40% relief on business rates, capped at £110,000, providing significant support for these industries.

VAT Implementation on Private Schools

Starting January 2025, VAT will apply to private school fees, with business rates relief for these institutions commencing in April 2025.

Stamp Duty Land Tax (SDLT) Increase

The additional SDLT rate will rise from 3% to 5%, effective immediately. Further guidance on Land Transaction Tax (LTT) for Wales is expected.

Tax Changes for Electric Vehicles and Company Cars

Company car tax will increase by 2% in 2028 and 2029, reaching 9% by the end of the decade, while other vehicle categories will see a 1% increase annually. This may impact fleet upgrade decisions for businesses reliant on vehicles.

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Additional Help

If you need more information, please refer to our Budget report availabl Alternatively, feel free to send any questions you may have to enquiries@mitchell-associates.co.uk. where we will respond to your enquiries over the next week through our blog, email, and social media channels.

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