How the 2024 Autumn Budget Impacts Your Limited Business
The 2024 Autumn Budget, introduced by the Labour government, includes several updates that could affect your limited business finances. From tax stability to increased payroll costs, here’s a breakdown of what you need to know to plan ahead.
Corporation Tax Remains Steady
Corporation Tax rates stay the same in this budget, with the main rate capped at 25% through the current Parliament. This stability means limited companies can focus on growth without unexpected tax hikes. Here are a few key points that continue to provide relief:
- Small Profits Rate: Small businesses can still benefit from the Small Profits Rate, allowing for marginal relief on lower profits.
- Capital Allowances: Full expensing remains in place, allowing companies to deduct 100% of qualifying plant and machinery costs. The Annual Investment Allowance also stays at £1 million, giving businesses room to invest in growth without additional tax burdens.
Increased National Insurance Contributions (NICs)
Starting in April 2025, businesses will see employer NICs increase by 1.2%, bringing the rate to 15%. Additionally, the NIC threshold will drop from £9,100 to £5,000 annually. While this shift will raise payroll costs, the Employment Allowance will also increase from £5,000 to £10,500, providing partial relief for eligible small businesses. Reviewing payroll budgets will be essential to handle these upcoming costs effectively.
Steady Business Rates with Future Relief for Retail and Hospitality
The government has kept business rates steady for 2024-25, a welcome relief as costs rise. Looking ahead to 2026-27, retail, hospitality, and leisure businesses—especially those on high streets—will benefit from permanently reduced rates. However, larger businesses with high-value properties may see their rates increase to balance these cuts.
VAT Thresholds Updated
Starting in April 2024, the VAT registration threshold will increase to £90,000, with the deregistration threshold set at £88,000. For businesses nearing these limits, this change offers a slight buffer before VAT compliance becomes necessary.
Higher Benefit-in-Kind Taxes on Company Vehicles
Tax rates on company cars, including electric vehicles, will gradually increase. For some cars, rates will rise from 2% up to 19% over the coming years. By 2025, expect higher costs for providing company car and van benefits, which will be calculated based on the September 2024 Consumer Prices Index. Reviewing these offerings may help manage increased costs on employee benefits.
Capital Gains and Business Asset Disposal Relief (BADR) Adjustments
Starting on 30 October 2024, Capital Gains Tax (CGT) rates are set to rise. The main rate will increase from 10% to 18%, with rates for carried interest moving from 20% to 24%. If you’re considering selling your business, locking in current rates could save on CGT.
The Business Asset Disposal Relief (BADR) rate will also increase from 10% to 14% in April 2025, and to 18% in 2026. This means that waiting to sell could mean paying more tax on gains. The cap on Investors’ Relief will drop dramatically from £10 million to £1 million in October 2024, significantly reducing the gains that qualify for this relief.
Final Thoughts
The 2024 Autumn Budget brings both challenges and opportunities for limited companies. While some areas will see cost increases, other updates offer stability and relief. If you’re planning major financial moves, like selling assets or expanding your payroll, consider reviewing these changes with an accountant to ensure your strategy aligns with the new landscape.
Need help navigating these changes?
Download our complete Guide to the Autumn Budget 2024 below!
