On 30 October 2024, Chancellor Rachel Reeves presented the Autumn Budget 2024 to parliament (Press release), setting out key fiscal measures aimed at stimulating economic growth and funding public services. The Autumn Budget was accompanied by the Corporate Tax Roadmap 2024 which sets out plans for corporate taxation. Below are the key takeaways for small and medium-sized businesses.
Minimum wage
One of the most significant changes in the Autumn Budget is the substantial increase to the national living wage (NLW) and national minimum wage (NMW). The government has accepted the Low Pay Commission’s recommendations in full (Press release and Policy paper).
- For those aged 21+, the NLW will increase by 6.7% from £11.44 to £12.21 per hour.
- The NMW will increase by 16.3% from £8.60 to £10.00 per hour for 18–20-year-olds.
- The NMW rate for apprentices and for workers aged 16–17 will increase by 18% from £6.40 to £7.55 per hour.
- Over time, the government intends to create a single adult wage rate.
For more information on the national living wage and the national minimum wage, see Staff pay and our earlier blog on the Commission’s recommendations.
National insurance and income tax
The Chancellor announced that the existing freeze on income tax and national insurance thresholds will remain until April 2028.
The Autumn Budget also outlines important changes to employer National Insurance Contributions (NICs).
- From 6 April 2025, NICs will rise from 13.8% to 15%.
- The threshold at which employers will be liable to pay NICS on employees’ salaries will be reduced from £9,100 to £5,000 per year. The threshold will increase in 2028 in line with inflation.
To mitigate the impact of these changes on very small businesses, the Employment Allowance will be increased from £5,000 to £10,500, and the £100,000 threshold will be removed from 6 April 2025. More small businesses will therefore be exempt from paying national insurance.
See our guidance on Process for paying staff for further information on NICs.
Capital gains tax
The Autumn Budget has also introduced adjustments to capital gains tax (CGT), which will be critical for business owners considering asset sales.
- On 30 October 2024, the lower CGT rate was raised from 10% to 18%, and the higher rate increased from 20% to 24%.
- From 6 April 2025, the rates for business asset disposal relief and investors’ relief will rise to 14%, and from 6 April 2026 these reliefs will match the main lower CGT rate of 18%. This gradual increase gives business owners time to plan ahead when considering the sale of business assets.
For more on capital gains tax, see Tax and business rates and Selling a company’s shares.
Inheritance tax
Changes to inheritance tax business property relief will be introduced from April 2026.
- The 100% relief rate will continue to apply to the first £1 million of business and agricultural property. Beyond this threshold, the relief will drop to 50%.
- The business property relief rate will be reduced to 50% for shares designated as ‘not listed’ on a recognised stock exchange such as AIM.
Business rates and support for small businesses
The Autumn Budget takes a supportive approach for small businesses, particularly those in the retail, hospitality and leisure (RHL) sectors.
- The government will introduce permanently lower business rates multipliers for RHL properties.
- The Autumn Budget allocates £1.9 billion in support for small businesses and the high street in 2025/26. Key measures include freezing the small business multiplier and providing 40% relief on RHL property bills (up to a £110,000 cap).
See Buying business premises for more information on business rates.
Conclusion
The Autumn Budget 2024 introduces a variety of reforms and measures that may have a significant impact on small and medium-sized businesses. SMEs should review these developments carefully and plan accordingly to navigate the evolving business landscape.
For tailored advice, you can use our Ask a Lawyer service.
The content in this article is up to date at the date of publishing. The information provided is intended only for information purposes, and is not for the purpose of providing legal advice. Sparqa Legal’s Terms of Use apply.
Becca joined Sparqa Legal as a Legal Editor in 2024 after transferring from FromCounsel. She previously worked as a caseworker at Advocate, the bar’s pro bono charity. Becca regularly writes for Sparqa’s blog, covering topics including staff contracts, discrimination, and health and safety.