Following on from this afternoon’s Budget, Graeme Hills, Head of Tax, recognises the higher costs for businesses, with targeted tax relief for industries like haulage and hospitality.
Today changes, including a National Insurance increase to 15% for employers and a 6.7% rise in the National Minimum Wage to £12.21, will require “radical financial reassessment.”
Graeme said: “The Autumn Budget isn’t disastrous, but let’s be frank - it isn’t all good news.”
Capital Gains Tax has now risen to 24%, which could dampen investment and slow asset disposal. However, Graeme notes that this rate “remains the lowest in the G7, maintaining some appeal for UK-based investments. While it’s a relief that it hasn’t been increased to the rumoured 45%, it is still an adjustment for many businesses.”
Hauliers and logistics companies received reassurance from the Government’s decision to freeze the 5p reduction on fuel duty for another year. “The freeze is a win for the transport sector, avoiding tax hikes that could disrupt essential goods movement,” says Graeme.
Meanwhile, hospitality businesses can look forward to lower business rates for retail, hospitality, and leisure. Coupled with a 1.7% duty reduction on draught products in pubs, this may support foot traffic by keeping pint prices steady, even amid rising labour costs.
Changes to Inheritance Tax for agricultural land also carry significant implications. With tax relief on farmland now capped at 50% for assets over £1 million, Graeme anticipates a shift in how farmers transfer assets to future generations. “This could prompt the farming community to transfer land earlier to avoid Inheritance Tax, but it does add an initial financial complication. It’s essentially an impending tax hike which may catalyse change long-term - but is likely to mean difficult decisions lie on the horizon for many of the nation’s farmers, meaning now is the time to act.”
Graeme continues, “With the National Minimum Wage increasing to over £23,000 annually, employers’ National Insurance contributions increasing to 15% while the secondary threshold for employer NI is almost halved to £5,000, finance departments across the country face an administrative challenge. This means that the nation’s biggest line of expenditure has just increased - and will inevitably mean that some businesses will need to think hard about how many employees they can afford.”
In the first ever Budget delivered by a female Chancellor, Rachel Reeves announced she was raising taxes by £40 billion and pledged to increase investment to drive growth, improve public services and ‘restore economic stability’.
Building on our initial response to the Autumn Budget, we are pleased to provide our detailed Budget Summary for Autumn 2024, covering all of yesterday’s announcements in greater detail.
Please click here to access our summary.
On Friday 1 November our tax experts provided a detailed review and analysis of the Budget’s content and what it means for businesses and individuals. You can watch the webinar here.
