Author6th November 2024 | Daniel Gibson | The Budget, Commercial Property, Businesses
Daniel Gibson, Trainee Solicitor in our Commercial Property team, highlights some of the amendments proposed in the budget and discusses their potential impacts on businesses and individuals.
As part of The Sherrards Training Academy, we have asked our Legal Assistants and Trainee Solicitors to write articles to support their learning, and to ensure they start to build on their own personal brand. This article has been fact-checked and proofread by Senior Associate in Commercial Property, Chris Piggott.
Overview
Amidst the LinkedIn chaos that has ensued following the 2024 Autumn Budget, the first for the Labour Government in 14 years, we must remember to appreciate the small wins:
The Chancellor has announced a 1p cut on draught pints.
Apparently, the average pint in London costs £5.59, therefore if you buy 559 pints you get your 560th completely free!
Down to brass tax…
Key Changes Affecting Businesses
The Chancellor’s increase in Capital Gains Tax for both basic and higher rate taxpayers to 18% and 24% respectively, isn’t huge, but it’s enough to make selling assets a bit pricier, especially for those engaging in Merger and Acquisitions. Higher CGT reduces post-sale profits, potentially making deals less appealing. Business Asset Disposal Relief will gradually rise to 14% in 2025 and 18% by 2026, pushing entrepreneurs to weigh exits more carefully. The result? We might see businesses holding assets longer or exploring tax-efficient deal structures.
Employers are bracing for a 1.2% increase in National Insurance contributions, bringing the rate to 15% by 2025, with the threshold reducing from £9,100 to £5,000. This move significantly raises costs, particularly for SMEs. On the bright side, the Government is raising the Employment Allowance to £10,500, allowing over 865,000 employers to avoid NICs altogether, which should help soften the blow. Still, many businesses will need to rethink their budgets to help navigate these changes.
Businesses in the retail, hospitality, and leisure sectors are set to benefit from a significant 40% reduction in business rates, providing a much-needed boost to their financial health. However, this relief is tempered by the rise in National Insurance Contributions to 15% and the reduced threshold, which may pose challenges. Additionally, the increase in the National Living Wage to £12.21 highlights the commitment to fair pay but may require businesses to reassess their hiring and staffing strategies to adapt to the changing economic landscape.
Impacts on Individuals
The Budget has introduced targeted measures aimed at supporting low-income households, focusing primarily on savings incentives and adjustments to benefits. The Help to Save scheme has been extended until April 2027, allowing low-income earners and Universal Credit recipients to save up to £50 per month. Participants can earn a 50% government bonus at the end of the second and fourth years, potentially accumulating as much as £1,200 over four years. However, the eligibility criteria may leave out some individuals in financial hardship, such as self-employed workers and those not claiming Universal Credit, even if they are on a low income.
Additionally, deductions from Universal Credit will be reduced from 25% to 15% of the standard allowance under the new Fair Repayment Rate. This change is expected to benefit around 1.2 million households, enabling them to retain an average of £420 more each year.
For employees, the budget brings positive news, notably a 6.7% increase in the National Living Wage, raising it to £12.21 for those aged 21 and over. However, this increase also puts pressure on small businesses, which will face higher National Insurance contributions, potentially complicating their hiring strategies. While the budget aims to improve employee wellbeing, businesses will need to adapt strategically to manage these new financial challenges.
Conclusion
The 2024 Autumn Budget is a mixed bag for businesses and individuals alike! On one hand, the push for higher wages and targeted support for crucial sectors is a step toward fairer working conditions. On the other hand, the rise in operational costs might be a bit of a pinch, especially for smaller enterprises.
As everyone adjusts to these changes, the key will be finding that sweet spot between meeting new regulations and keeping the workplace vibe positive and engaged. Here’s to navigating this new landscape with creativity and resilience!
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