As the year draws to a close, the Autumn Budget is a critical milestone for UK businesses and individuals alike. The Chancellor’s announcement shapes the economic landscape, influencing tax policies, employment, and more. Understanding the autumn budget changes is essential for you to make informed decisions for the future, regardless of whether your business is thriving or facing financial challenges.
In this blog, we will delve into the updates that will impact businesses most — with a particular focus on any firms facing financial distress. We’ll also highlight how Inquesta’s experts can guide you through any challenging times you might expect to face in the aftermath of this year’s iteration of the Autumn Budget — ensuring you can make a proactive and informed response.
What Is The New Autumn Budget 2024?
The new 2024 Autumn Budget is Labour’s first fiscal plan since securing a majority in the 2024 general election. This marks a significant policy shift after over a decade of Conservative rule. Delivered by Chancellor Rachel Reeves on October 30th, 2024, this budget outlines the government’s economic priorities, and primary strategies for the coming years.
The core aim of the Autumn Budget this year is to raise around £40 billion in taxes, while also fulfilling election promises, enhancing long-term growth, and boosting investment. Minimising the tax burden on individuals will also be a feature where possible.
This year’s budget was announced in the midst of a period of serious economic challenges. Key measures implemented into Labour’s new Autumn Budget include alterations to the standard National Insurance Contributions, updates to business rates, increased Stamp Duty/Land/Capital Gains Tax, and more.
Key Autumn Budget Changes And Their Implications
The UK Chancellor’s Autumn Budget 2024 includes a number of announcements that are expected to affect all walks of life. This may notably include business owners who, depending on their circumstances, could find themselves being significantly impacted. Here are a few of the most crucial autumn budget details company directors should be aware of:
Tax Changes (Capital Gains and Corporation)
Among the autumn budget details, there are significant changes to Capital Gains Tax (CGT) and Corporation Tax in the coming year.
Starting in April 2025, the government has announced its intention to raise the CGT rates. These changes will see the basic rate increasing from 10% up to 18%, and the higher rate rising from 20% to 24%. For a business owner/director/investor, such changes could seriously affect decision making surrounding plans for the coming year — including asset sales, corporate restructuring, and expansions.
An additional wrinkle to consider amongst the raft of announcements in the new Autumn Budget for 2024 includes what will happen regarding Corporation Tax. The Chancellor announced that Corporation Tax will remain fixed at the 25% rate set in 2023. While this might not represent a rise, it can still have an impact, particularly for any growing companies.
National Insurance and Employment Costs:
The new Autumn Budget also outlined an increase in National Insurance Contributions (NICs) for employers. This boost, by 1.2%, comes into place in April 2025. NICs are a tax that firms pay on their employees’ wages and it is used to help fund a range of social services, like the NHS and pensions. This increase means that employers will be expected to pay more out for the earnings of each employee, likely raising total payroll costs each year.
The increase in National Insurance Contributions (NICs), combined with changes to Employment Allowances, can significantly impact financial sustainability. The Employment Allowance is intended to help small businesses to reduce their NIC liabilities. The rate is set to increase from £5,000 currently, to £10,500 in April. This effectively means that any eligible companies will be able to reduce their NICs by this much larger amount — lowering payroll costs by £5,500.
Something else to keep in mind; the £100,000 eligibility threshold for this allowance will also be removed, enabling many more businesses to benefit from it. This relief can be helpful but may not fully offset increased payroll expenses, especially for small and medium-sized enterprises (SMEs). SMEs are far more likely to feel a squeeze to profit margins, and business owners should carefully evaluate their strategy in order to mitigate costs as much as possible, while remaining functional in the job market, and retaining operational effectiveness.
National Wage Increases
From April of 2025, the minimum wage for employees ages 21+ will increase by 6.7% to £12.21 per hour. Younger employees aged 18-20 will see an even larger percentage boost of 16.3%. This increase for young workers is the first step in eliminating age-based minimum wage caps — something directors may wish to consider when planning for the years ahead.
The purpose of the wage hike is to support employees amid the rising cost of living. However, such an increase will naturally be reflected in corporate payroll expenses. This impact is particularly significant in industries like retail, hospitality, and manufacturing, as they will often rely on younger or lower-wage staff.
Business Rates Support For Key Sectors
One of the more pertinent Autumn Budget changes for business owners is the announcement that tax rates will be lowered for certain important sectors: retail, hospitality, and leisure. This change won’t come into effect until the 2026/27 fiscal year, but is intended to support some of the industries that have faced the most significant challenges in recent times, and ensure they receive the support they may need.
Until then, businesses will have a 40% business relief rate, up to a cap of £110,000, once the current period of 75% relief comes to an end in 2025.
Corporate Tax Roadmap
In addition to the new Autumn Budget changes in 2024, the government also unveiled a ‘Corporate Tax Roadmap’. The purpose of these plans is to offer some much-needed clarity for any directors looking to plan for the future during times of upheaval and instability. The roadmap contains a selection of commitments that will benefit businesses, including:
- Corporation Tax Cap: The Corporation Cap will be capped at 25% for the entire duration of this parliament.
- “Full Expensing and Annual Investment Allowance: The Government has committed to maintaining full expensing measures, as well as the £1 million Annual Investment Allowance, for the foreseeable future.”
By introducing these measures, The Government is intending to create a supportive environment for business, in order to allow them to plan ahead with confidence.
Potential Challenges For Struggling Businesses From The Autumn Budget
While the purpose of the Autumn Budget is to provide a much-needed degree of stability for as many businesses as possible, it’s not possible to help everybody. Some companies, particularly those facing financial distress, will encounter some added pressure as a result of the announced changes. This includes impacted cash flow, rising operational costs, and more.
Some of the most prominent challenges struggling businesses may face as a result of the Autumn Budget changes include:
- Cash Flow Hit: Cash flow reserves can be quickly depleted as a result of increased taxes and employment costs.
- Rising Operational Costs: With increased payroll costs, energy prices, and the ever-lingering impact of inflation, profit margins are likely to be eroded for many.
- Complex Restructurings: Selling assets as part of a business restructuring is a common method of avoiding insolvency. A higher rate of CGT will reduce the net return from this and complicate the restructuring process — meaning it’s more important than ever that you work with specialists if looking for support.
Navigating Financial Concerns Post-Autumn Budget
Any business owners out there anticipating issues stemming from any of the new Autumn Budget changes should seek guidance where possible. An insolvency expert will be able to play a key role in helping to assess your company’s financial health, develop a sound turnaround strategy, and if necessary, guide you through company closure in order to mitigate the long-term damage.
If you’re struggling, Inquesta can offer critical support via our varied company rescue services. Here’s how we can help you:
- Business Restructuring: Revitalise your operations and improve financial stability via a tailored restructuring plan.
- Administration: Protect your company from the action of creditors while gaining the breathing room to explore rescue options.
- Company Voluntary Arrangement: Restructure your debt with a formal agreement intended to help you recover from difficulties.
- Partnership Voluntary Arrangement: Tailored solutions catering for partnerships facing a period of financial problems.
- Recovery Strategies: Turn your situation around with strategic advice and support specifically focused on recovery.
- Commercial Finance: Access alternative financial solutions in order to improve your cash flow and maximise future growth potential.
Are you concerned about the impact of the recent Autumn Budget changes on your business? Contact Inquesta today for expert advice and tailored solutions designed to safeguard your firm’s financial future.
What if Closure Becomes The Best Option?
For any businesses facing severe financial difficulties in recent months, the announcement of the new Autumn Budget may be the final straw, if they are unable to deal with some of the incoming changes to operational costs/cash flow. If you’re in this position, here are some of the options available to you:
Liquidation Services
- Creditors Voluntary Liquidation (CVL): If your company is insolvent and unable to meet its obligations, a CVL allows directors to voluntarily wind up the firm, settle debts, and avoid compulsory liquidation.
- Members’ Voluntary Liquidation (MVL): For those solvent companies looking for a way to shut their operation down, an MVL is a tax-efficient method to distribute assets to shareholders and end an era of a club.
- Compulsory Liquidation: When your company has been forced into liquidation via a court order as a result of unpaid debts, Inquesta’s team of insolvency specialists can help guide you through the process. Our team can ensure compliance and minimise the chance of liabilities.
Navigating The Road Post-Budget With Inquesta
Every year, the new Autumn Budget brings with it significant implications for business across the length and breath of the UK. 2024 is no different, especially for those already grappling with the financial pressures of inflation and economic and political upheaval.
Whether it’s dealing with the consequences of rising taxation, increased payroll costs, or navigating the complexities that will naturally come with new regulations, understanding the changes and how they will affect you is vital to making more informed strategic decisions.
At Inquesta, we understand the unique challenges that many businesses can face following periods of economic uncertainty. Our team of insolvency and business rescue experts is here to help and guide you through these uncertain times. So whether you need help with managing your cash flow, require support getting a company restructure right, require an experienced hand with recovery, or are in need of an expert to ensure your closure goes ahead smoothly, we are ideally positioned.
Worried about the Autumn Budget changes? Don’t wait until it’s too late. Get ahead of the curve by proactively assessing and addressing your areas of financial concern. Contact Inquesta today for expert guidance and customised strategies to better understand the full impact of the new Autumn Budget on your business.