The Autumn 2024 Budget, presented by Chancellor Rachel Reeves, introduces several significant changes aimed at stabilising the economy. Here’s a breakdown of the key points and their potential impact on SMEs:
National Minimum Wage Increase
From April 2025, the National Minimum Wage will rise to £12.21 per hour for workers over 21. This increase aims to improve living standards but may also lead to higher payroll costs for SMEs. Businesses will need to budget for these changes and possibly adjust their pricing strategies to maintain profitability.
Employers’ National Insurance Contributions
Employers’ National Insurance contributions will increase by 1.2 percentage points to 15%. Furthermore the threshold above which Employers’ National Insurance is paid has been reduced from £9,100 to £5,000. To try to mitigate this impact, the Employment Allowance will rise from £5,000 to £10,500, which will help some smaller businesses reduce their National Insurance bills.
Business Rates Relief
The government will introduce permanently lower business rates for retail, hospitality, and leisure businesses from 2026-27. Until then, these sectors will receive a 40% relief on business rates up to a cap of £110,000. This measure is designed to support sectors that were heavily impacted by the pandemic and economic downturns.
Capital Gains Tax Adjustments
Capital gains tax rates will increase, with the lower rate rising from 10% to 18% and the higher rate from 20% to 24%. However, the business asset disposal relief will remain, albeit at higher rates over the coming years. SMEs planning to sell business assets should consider these changes in their financial planning.
Fuel Duty Freeze
The freeze on fuel duty will be extended for another year, maintaining the 5p cut introduced in March 2022. This is particularly beneficial for SMEs that rely on logistics, transportation, or delivery services, as it helps cap fuel costs.
Corporate Tax Roadmap
The budget outlines a Corporate Tax Roadmap, capping the headline rate of Corporation Tax at 25% for the duration of the parliament. This rate is the lowest in the G7, providing a competitive edge for UK businesses. The roadmap also retains the small profits rate and marginal relief at current rates and thresholds, along with maintaining a world-leading capital allowances system.
Support for Innovation and Infrastructure
The budget emphasises increased investment in innovation and infrastructure. This includes protecting record funding for research and development, which can provide SMEs with more opportunities to innovate and grow. Additionally, the long-term industrial strategy aims to expand opportunities for SMEs to thrive in a modern economy.
The Autumn 2024 Budget brings a mix of challenges and opportunities for SMEs. While there are increases in wages and taxes that will strain budgets, the government has also introduced some measures to support smaller businesses through allowances, reliefs, and investments. SMEs should carefully review these changes and adjust their financial and operational strategies accordingly to navigate the evolving economic landscape.
How Newable Can Help SMEs Navigate the Challenges of the Autumn 2024 Budget
At Newable, we understand that navigating these changes can be daunting. Here’s how we can support your business through these transitions:
Financial Support and Investment
Newable Finance offers a range of financial products and services tailored to the needs of SMEs. Whether you need help managing cash flow, securing investment, or planning for long-term growth, our experienced advisory team is here to assist. We provide free and independent advice to help you find the best financial solutions for your business.
Business Advice and Mentoring
Our mentoring programmes are designed to provide SMEs with strategic guidance and practical advice. Mentors can help you navigate the complexities of increased payroll costs due to the National Minimum Wage rise and the higher National Insurance contributions. With their experience and insights, mentors can help you make informed decisions, optimise operations, and boost profitability.
Workspace Solutions
Finding the right workspace is crucial for business growth. Newable offers flexible workspace solutions that can adapt to your changing needs. Whether you’re looking to expand or need a more cost-effective location, we can help you find the perfect space to support your business operations.
Navigating Tax Changes
With the increase in Capital Gains Tax rates, it’s essential to plan your financial strategy carefully.
Support for Innovation and Growth
Newable is committed to fostering innovation and growth among SMEs. We offer support for research and development projects, helping you access funding and resources to drive innovation.
Sector-Specific Support
For businesses in the retail, hospitality, and leisure sectors, the new business rates relief can provide significant savings. Our teams can help you understand and apply for these reliefs, ensuring you maximize the benefits available to your business.
Navigating the changes brought by the Autumn 2024 Budget can be challenging, but with Newable by your side, you don’t have to do it alone. Our comprehensive support services are designed to help SMEs like yours adapt and thrive. From financial advice and mentoring to workspace solutions and innovation support, we’re here to help you every step of the way.