The chancellor has made some challenging choices in the budget. Today (Thursday), small businesses will need to decide their next steps: should they increase prices, shift growth investments, or cut staff?
Dorchester Chamber President Steve Bulley reacted: “While it’s good to see that the smallest businesses employing minimum wage workers are exempt from National Insurance, this measure barely mitigates the impact of the £25bn tax increase on businesses.
“Small businesses are known for their resilience, but they’ll need assistance to adapt their strategies to handle the overall higher tax burden. It is encouraging that the expected rises in Capital Gains Tax and Business Asset Disposal Relief were less significant than anticipated.
“Our members see the reduction in Business Rate Relief will nearly double costs for many independent high street retailers starting in April, so swift action is necessary to mitigate this.
“As the voice for business in the Dorset Council area we are eager to continue to collaborate with the local government on their Small Business Plans to help small businesses manage the rising costs.”
Chancellor Rachel Reeves’ 2024 Autumn Budget: Key Points for Small Business Owners
Employers’ National Insurance
- From April 2025, Employers’ National Insurance contributions will rise by 1.2 percentage points to 15%.
- The secondary threshold, where employers start paying National Insurance on a worker’s salary, will be reduced from £9,100 to £5,000 annually.
Employment Allowance
- The Employment Allowance will increase from £5,000 to £10,500, exempting 865,000 small businesses from paying National Insurance.
Business Rates
- From 2026-27, business rates for retail, hospitality, and leisure properties in England will be permanently lowered.
- For 2025-26, 250,000 RHL properties will receive 40% relief on their bills, capped at £110,000 per business.
- The small business multiplier will be frozen for 2025-26.
- A “discussion paper” on transforming the business rates system has been published.
Fuel Duty
- Fuel duty will be frozen for this year and 2025, retaining the temporary 5p cut, saving the average car driver £59 in 2025-26.
Minimum Wage
- From April 2025, the minimum wage for employees aged 21 and over will rise by 6.7% to £12.21 per hour.
- For workers aged 18 to 20, the minimum wage will increase by 16.3% to £10 per hour.
Late Payment
- From 1 October 2025, companies bidding for government contracts over £5m per annum must pay their suppliers within an average of 45 days to be eligible.
Corporation Tax
- The government has published a Corporation Tax ‘roadmap’ with key commitments:
- Capping the headline rate at 25% for the duration of parliament.
- Retaining the small profits rate and marginal relief at current rates and thresholds.
- Maintaining the capital allowances system, including permanent full expensing and the £1m annual investment allowance.
- Preserving the generosity of R&D reliefs.
- Collaborating with companies on simplification and digitisation.
- Developing a new process for tax certainty on major investments.
Business Asset Disposal Relief (BADR)
- BADR, the Capital Gains Tax relief for entrepreneurs selling their businesses, will increase from 10% to 14% in 2025 and to 18% in 2026.
- The higher rate of Capital Gains Tax (CGT) will rise from 18% to 24%, including CGT on residential property sales.
HM Revenue & Customs (HMRC) Reform
- Investment in HMRC’s customer services aims to answer 85% of phone calls.
- A “digital transformation roadmap” will be published in spring 2025 to make HMRC a digital-first organisation.
- Modernisation efforts will improve HMRC’s internal systems and customer engagement, including through the HMRC App.
Tax Thresholds
- From April 2028, personal tax thresholds will increase in line with inflation.
Alcohol Duty
- From February 2025, alcohol duty on draught products will be reduced by 1 penny per pint, while duty on non-draught products will rise with RPI inflation.
- Mandatory duty stamps for spirits will be removed, and investment in the Spirit Drinks Verification Scheme will increase.
Vaping Products Duty
- From 1 October 2026, a flat-rate excise duty of £2.20 per 10ml vaping liquid will be introduced, along with a corresponding increase in tobacco duty.
Small Business Funding Schemes
- Over £1bn will be provided to the British Business Bank in 2024-25 and 2025-26, including £250m each year for Start Up Loans and the Growth Guarantee Scheme.
Made Smarter Adoption Programme
- Funding will double to £16m in 2025-26, extending support to all nine English regions for small manufacturing businesses to adopt advanced digital technologies.
Shared Prosperity Fund
- The UK Shared Prosperity Fund will be extended at a reduced level of £900m for another year, allowing local authorities to invest in local growth.
Help to Grow and Growth Hub in England
- The Help to Grow: Management course and Growth Hubs in England will continue to be funded in 2025-26.
Small Business Strategy Command Paper
- A “Small Business Strategy Command Paper” will be published next year, outlining the government’s vision for supporting small businesses, including boosting scale-ups, growing the cooperative economy, and creating thriving high streets.
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