Whilst October 2024 feels a lifetime ago, the impact of the bombshell announcements from Rachel Reeves last Autumn are still rippling in effect. Six months on, UK businesses are still reeling after the first Labour Budget in fourteen years. An event that will no doubt make the next publication of history books, it’s not one that will be remembered fondly by business owners with many still coming to terms with a new way of working within the Chancellor’s changes. Thankfully, the recent Spring Statement was somewhat uneventful, which only fuels the fires of speculation that Ms Reeves’ Autumn announcements will impose more burden on UK businesses…
Whilst a lot of the rumours were checked off of our metaphorical “budget bingo” card last October, we didn’t get a “full house” of predicted changes. Instead, the Chancellor delivered a number of unwelcome surprises in an attempt to address the economic “black hole.” Our wooden spoon prize? A £40bn tax hike – the highest within a single budget for 30 years.
So what are the key changes to come out of the 2024 Autumn Budget, and what do they actually mean for UK businesses?
National Insurance:
As of April 2025, the rate at which employers pay National Insurance Contributions (NICs) on the earnings of their staff increased from 13.8% to 15%.
The secondary earnings threshold, the point at which employers NICs become payable, has been reduced from £9,100 to £5,000 per annum. Assuming an employee is already earning above £9,100, this will place an additional £615.00 per employee financial burden on businesses. The reduction in the threshold will be felt more strongly by businesses who employ a large number of lower paid workers, such as those in the hospitality, cleaning and care sectors.
National Living Wage
The over 21 National Living Wage increased by 6.7% as of April 2025, to £12.21 an hour. This will then trigger the gradual uplift of the 18-21 year old National Minimum Wage rate to match the National Living Wage. For the 25/26 rates, a 16% increase to £10 an hour will be applied to the 18-21 bracket to start this alignment with the National Living Wage. This increase will have a significant impact on the bottom-line profit for businesses who employ large number of workers who fall within the 18-21 age group.
We will also see the Employment Allowance rise from £5,000 to £10,500 which will provide welcome support for some smaller businesses. The £100,000 eligibility threshold has also been removed, meaning that this allowance has been expanded to all businesses who pay Employer National Insurance.
Capital Gains Tax
From 30 October 2024, the rate of Capital Gains Tax for Basic Rate taxpayers increased from 10% to 18%. Higher rate and additional rate taxpayers also saw an increase from 20% to 24%.
The £1M Lifetime Limit on Business Asset Disposal Relief (BADR) was maintained. However, from 6 April 2025, the relief will only reduce the rate to 14%, instead of the current 10%. From 6 April 2026, the BADR rate will rise again to 18%.
Inheritance Tax
From 6 April 2026, 100% Business Property Relief (BPR) and Agricultural Property Relief (APR) is restricted to the first £1m of assets, with 50% relief thereafter. Effectively, this gives a 20% IHT rate for qualifying businesses and agricultural assets. Furthermore, pension funds will move into the IHT net from 6 April 2027.
It will be very important for those impacted to review their Inheritance tax position.
Double Cab Pick Ups
The policy documents published after Rachel Reeves’ announcement confirmed that HMRC is updating the guidance in regard to the position of Double Cab Pick Ups (DCPUs). From 6 April 2025, HMRC will no longer apply the ‘payload’ test to DCPUs. Instead, employers should now follow the process applied to crew-cab vehicles, where they consider whether the vehicle’s primary usage will be for transporting passengers or goods. DCPUs will be categorised as cars if their primary use is for carrying passengers, or if it is determined that there is no primary suitability. Employers must carry out the assessment on the vehicle at the point that it is provided to the employee and should include any after-market modifications.
There will be a transitional period where existing DCPU drivers’ benefit-in kind position will be protected. Employees who are using a DCPU that was ordered, purchased, or leased on or before 5 April of this year, can continue to treat their DCPU with a payload of more than one tonne as a van until 5 April 2029, or until the vehicle is disposed of – whichever is soonest.
For more information on the changes outlined above, visit our dedicated Budget Resource Hub: www.ensors.co.uk/insights/budget-resource-hub or speak to your usual Ensors contact.
The information contained within this publication is given by way of general guidance. Specialist advice should always be sought in relation to your particular circumstances. No liability is accepted by Ensors for any actions taken without seeking appropriate professional advice.
