Autumn Budget 2024: What’s the New Update For Individuals and Businesses?

The female chancellor of the United Kingdom, Rachael Reeves, presented the 2024 Autumn Budget to the parliament.

Since she joined the office in July 2024, it has disclosed a substantial financial deficit in the UK’s economic structure, which could be as large as £100 billion.

We knew the UK needed to get back on track, but we hadn’t anticipated the significant changes required to address the reported budget shortfall.

Autumn Budget 2024 Affect on Individuals and Businesses

The autumn budget 2024 introduced various changes in the UK’s financial black hole. These changes affect individuals and businesses. This is especially true for companies taking salaries up to £91000 and those making a good amount through investments and companies. Some changes will be implemented instantly, while others will come into action from April 2025 and beyond.

Let’s look at the changes that have been decided in the new update.

Changes in the National Insurance

Previous government announcements related to the National Insurance freeze will be maintained. That means employees will see no change in the rates and threshold. This change will continue until April 28, when it will rise with inflation.

• If, as an employee, you earn below £12570 per year, then you won’t have to pay National Insurance Contributions. There’s a benefit for lower-income earners by freeing them from deductions.
• The Lower Earning Limit is the minimum income level you can earn in a year. It will increase to £6500 from £ 6396 in April 2025.
• So individuals earning less than £6500 won’t qualify for National Insurance.
• Individuals earning £6500 or more can qualify straight for a state pension.

Three Major Changes of National Insurance Contribution For Employers

The new update includes the following significant changes for the employer. Let’s break down the new updates for the employer.

• The rate of National Insurance that employers pay will increase from 13.8% to 15% from April 6, 2025. 
• The Secondary National Insurance Threshold has dropped to £5000 from £9100. This change will be implemented on April 6, 2025. 
• A new update has increased the employment allowance from £5000 to £10500 and removed the current cap of £100000.

What Does This Change Indicate?

This change will benefit small business owners, as they can offset more NIC costs. From April 6, 2025, self-employed persons will also see a slight profit threshold rise (from £6725 to £6845). 

This change aims to reduce the burden on businesses by allowing them to save more from their earnings and help smaller businesses with rising employment costs.

Increase in Rates of Capital Gains Tax

The government has now changed the capital gains tax on the disposal of non-residential property assets. This change means

• The introductory rate for taxpayers will increase to 18% from the previous 10%
• The higher rate tax will increase to 24% from current 20%

However, this change is not implemented if you sell or dispose of your residential property.

If you want to close your business, the Asset disposal Relief will increase to 14% from the current 10%  from April 6, 2025. However, from April 2026, this change will rise to %18.

New Value Added Tax Changes

There are no specific new changes to the VAT rates and threshold; however, a 20% increase in VAT on private education will come into effect in January 2025.

This change impacts the payments made on or after July 29, 2024.

Income Tax Remains the same in the Autumn Budget 2024

• The Autumn Budget 2024 has kept the promise of not changing the current rates and threshold.  
• However, the freeze implemented by the previous government will not extend beyond the current period.
• The threshold will rise with inflation from April 2028. If the cost of living increases, the threshold will be adjusted to reflect the increase.

That means before April 2028, people should earn slightly more to reach a specific tax and benefit threshold, as these will be adjusted for inflation.

Increase In National Minimum and Living Wage

The National Minimum Wage and Living Wage are set to rise in April 2025, as below. 

• For the people over age 21, the sewage is set to be £12.21
• It will be £10 for 18 to 20 years old.
• For apprentices 17 years old, it will be £7.55.

Other Essential Key Updates From the Autumn Budget 2024

Corporation Tax	There has been no change in corporation tax rates and thresholds. That means the corporation tax cap remains at 25% per the last government rules.
Benefits in Kind	Van and car fuel rates benefits will rise from 6th April 2025.
Stamp Duty Increase	The stamp duty on owning a second property will increase from 3% to 5% from October 31, 2024.
Non-Domiciled Status	The remittance basis for taxation will be abolished from 6th April 2025.
Business Rates Relief	The small business multiplier will stay frozen for the 2025/2026 tax year, providing a 40% relief capped at £110,000. From 2026/2027, there will also be lower business rate multipliers for those in detail, hospitality, and leisure.
Tax Debts	The interest rates on tax debts will increase. This measure is taken to encourage early payments.
Annual Investment Allowances	The annual investment allowance has not been changed to remain at £1 million.
Fuel Duty	The rates will stay frozen for 2025/2026, with the 5p cut expiring on 22 March 2026.
Business Vehicles	From 1 April 2025, double cab pick-up vehicles will be classed as cars for corporation tax. Starting 6 April 2025, they will also be treated as income tax vehicles.

What are the key insights from the SMEs’ budget?

Various new changes were introduced in the latest Autumn budget 2024 to strengthen the UK economy.

However, the latest budget has both positive and negative reactions. So, every business owner, small or large scale, must understand its implications for operations and financial planning.

What are the significant impacts of SME’s in the UK?

Higher National Insurance Cost	The National Insurance contribution will rise from 13.8% to 15%, and a reduction of the secondary threshold will raise employment costs for SMEs, potentially affecting hiring and salary decisions.
Rise in the Employment Allowance	The Employment Allowance rise to £10,500 provides relief to small businesses, helping them offset the increased National Insurance cost and supporting job retention.
Capital Gains Tax impact:	The increase in Capital gain rates from 18% to 24% can put off investment and asset sales among businesses, affecting cash flow and growth strategies.
Increased Employment Allowance:	The rise in the Employment allowance to £10,500 provides some relief for small businesses, helping to offset the increased National Insurance costs and support job retention.
Stamp Duty on second properties:	The increase in stamp duty may prevent small business owners from expanding their property, which can impact their long-term investment plans.
Fuel duty stability:	The fuel duty freeze rates can help SMEs with financial relief by managing transportation costs and raising operational expenses.
Changes to Benefits in Kind:	Van and car fuel rates will increase from 6 April 2025, meaning SMEs must assess how to handle these additional expenses effectively.