Rachel Reeves MP, the UK’s first female Chancellor, announced the Labour government’s first Autumn Budget, designed to reshape financial priorities and boost key public services. With a tax increase of £40 billion planned to “restore financial stability” and rebuild Britain, there are a few key measures you should be aware of—and how they could impact your plans.
Here’s a closer look at what these changes mean for your business and how you can prepare.
1. National Insurance Contributions (NICs) and Employment Allowance: Managing Payroll Costs
From April 2025, employers will see an increase in NICs, with the rate going up from 13.8% to 15% on earnings above £175 per week. Additionally, the threshold at which NICs start will be reduced from £9,100 to £5,000, meaning smaller businesses will face higher contributions. On a positive note, the Employment Allowance—which reduces NICs liability for eligible employers—will rise to £10,500. This change is likely to be helpful for smaller businesses looking to manage increased payroll costs.
Practical Tip: Consider revisiting your payroll expenses and budgeting to accommodate these NIC changes. For businesses with fewer employees, the higher Employment Allowance could offset some of the impact, so be sure to take full advantage if you qualify.
2. Business Rates Relief Changes: Assessing Impact on Retail, Hospitality, and Leisure
The current 75% business rates relief for retail, hospitality, and leisure sectors will drop to 40% after April 2025. While this remains a discount, the reduction means that businesses in these sectors will need to prepare for a higher rate bill in future years.
Practical Tip: It may be worthwhile to review your business rates valuations or consider making use of local government grants and incentives that could help offset these additional expenses. Staying informed on regional relief schemes can also be beneficial.
3. Inheritance Tax (IHT) and Property Relief Changes: Preparing for New Rules
The freeze on the IHT threshold at £325,000 until 2030, combined with upcoming reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR), will impact business owners planning to pass on assets. As of April 2026, the highest rate of APR and BPR will remain at 100% only for the first £1 million in combined agricultural and business assets, reducing to 50% beyond that. Offshore trusts will also no longer be exempt from IHT, closing a common avenue for asset protection.
Practical Tip: For business owners considering succession planning, now is the time to discuss these changes with a tax adviser. Understanding the impact of reduced reliefs can help you structure asset transfers more effectively and minimise IHT exposure.
4. Capital Gains Tax (CGT): Adapting to Higher Rates
CGT rates will increase for basic and higher-rate taxpayers, moving from 10% to 18% and from 20% to 24%, respectively. Business Asset Disposal Relief will also be restructured, with the current 10% rate rising to 14% in April 2025 and then 18% in April 2026.
Practical Tip: If you’re planning on selling business assets in the near term, you may want to consider doing so before these new rates come into effect. For those further out, working with a financial adviser to optimise the timing of any disposals could reduce your tax burden.
5. VAT on Private School Fees
VAT at the standard rate will be added to private school fees starting January 2025. For small business owners with children in private education, this could mean higher personal expenses.
Practical Tip: To help manage this, consider setting up a dedicated savings plan or budget for the additional expense; this could ease the financial impact over time. We also talk about this here!
6. Changes to SDLT
If you’re considering investment in property, note that the SDLT surcharge for additional properties will increase from 3% to 5% in England and Northern Ireland starting 31 October 2024.
Practical Tip: For those in property investment or planning new acquisitions, factor in these increases when calculating overall expenses. If you are considering multiple properties, timing purchases before the surcharge increase could save costs.
7. Corporation Tax Rate Stability
The corporation tax rate remains steady at 25% on profits over £250,000. While no new increases were announced, this stable rate gives businesses some predictability in their tax planning.
Practical Tip: Consider how capital investments, eligible for full expensing under current rules, could reduce your taxable profits. Maintaining or increasing investments in qualifying assets could help offset tax liabilities.
8. Excise Duties and Sector-Specific Taxes: Impact on Fuel, Alcohol, and More
The extension of the fuel duty freeze provides a bit of relief for businesses dependent on transportation, while the extension of the 5p cut on fuel tax until March 2026 could make a difference for small logistics operations. However, alcohol duties will rise in line with inflation, with select reliefs for drinks sold in pubs. Other sector-specific changes include an increase in air passenger duty on private flights and a new 22p/ml duty on vaping products from October 2026.
Practical Tip: For businesses in the logistics, hospitality, or entertainment sectors, review how these adjustments may affect your operational costs. Where possible, explore partnerships or bulk purchasing options to mitigate the impact of rising costs in these areas.
9. Maintaining Current Capital Allowances and R&D Reliefs
The government has committed to maintaining the capital allowances system, including full expensing and the £1 million Annual Investment Allowance (AIA), as well as current R&D reliefs. This stability could encourage continued investment in growth and innovation.
Practical Tip: Capital investment, particularly in machinery, equipment, or technology, could be an effective way to grow your business and manage tax liabilities. Full expensing means you can deduct the full cost of these assets against your taxable profits, making this an attractive time to consider any planned expansions.
What’s Next?
The Autumn Budget contains changes that require planning, but it also offers opportunities. With stability in corporation tax and increases in employment allowances, small business owners can plan more effectively. The shift in NICs, CGT, and IHT policies could necessitate updates to payroll, succession, and asset management strategies.
As always, staying proactive and informed is essential. For further details and specific guidance, our Budget Hub will be updated throughout the day with detailed breakdowns, resources, and tips. Take advantage of these insights, and remember that with careful planning, you can adapt to these changes and continue to build on your business goals.
