What does the 2024 budget mean for your business?
The Autumn UK Budget 2024
The first Labour Budget in 14 years has been unveiled by Chancellor Rachel Reeves, bringing a series of pledges aimed at bolstering growth and restoring economic stability.
In her address on 30 October 2024, Chancellor Reeves emphasised her commitment to “invest, invest, invest” to stimulate the economy. While some measures introduced are narrowly focused, others—such as adjustments to Employers’ NIC rates and updates to Business Asset Disposal Relief—carry implications for a wider range of businesses.
What does this Budget mean for businesses? Let’s break down the key announcements to see how they could affect your company.
Budget 2024 Contents
Employment Taxes in the 2024 Budget
National Insurance contributions
Employees and NICs
From 6 April 2024, the main rate of Class 1 employee National Insurance Contributions (NICs) was set at 8%, with the employer rate at 13.8%. However, in a significant shift, with the 2024 budget it has been announced that there will be an increase in the employer rate to 15% from 6 April 2025.
Another major change in the government budget 2024 affects the Secondary Threshold, the earnings level at which employers become liable for NICs on an individual employee’s earnings. Currently set at £9,100 annually, this threshold will drop to £5,000 from 6 April 2025 through to 6 April 2028, after which it will adjust in line with the Consumer Price Index (CPI).
To help offset this increase for smaller businesses, Chancellor Reeves announced a boost to the Employment Allowance. Currently, the allowance lets businesses with employer NIC bills of £100,000 or less from the previous tax year deduct £5,000 from their NIC liability. From 6 April 2025, this allowance will rise significantly to £10,500, providing added relief for employers facing rising NIC costs.
The £100,000 eligibility cap will also be lifted, extending this benefit to all eligible employers with NIC liabilities. These adjustments represent significant changes to employer NIC obligations, and it’s essential to consider how they may affect your business planning.
The self-employed and NICs
From 6 April 2024, the rates for Class 4 NICs for the self-employed were set at 6% and 2%. These rates will remain unchanged from 6 April 2025.
For Class 2 NICs from 6 April 2024:
Self-employed people with profits of £6,725 and above get access to contributory benefits, including the State Pension, through a National Insurance credit, without paying Class 2 NICs.
Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension will continue to be able to do so.
Other NIC changes for 2025/26
The government budget 2024 will increase the Lower Earnings Limit (LEL) and the Small Profits Threshold (SPT) from the September 2024 CPI rate by 1.7% for 2025/26. For those paying voluntarily, the government will also increase Class 2 and Class 3 NICs by 1.7% in 2025/26.
The LEL will be £6,500 per annum (£125 per week) and the SPT will be £6,845 per annum. The main Class 2 rate will be £3.50 per week and the Class 3 rate will be £17.75 per week.
Employer NICs relief for veterans
The 2024 budget also shows the government is extending the employer NICs relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026.
This means that businesses will continue to pay no employer NICs up to annual earnings of the Veterans Upper Secondary Threshold of £50,270 for the first year of a veteran’s employment in a civilian role.
National Living Wage and National Minimum Wage
The government has announced increased rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from 1 April 2025. The rates which will apply are as follows:
| NLW | 18-20 | 16-17 | Apprentices | |
| From 1 April 2025 | £12.21 | £10.00 | £7.55 | £7.55 |
The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over.
This means for an NLW worker working 37.5 hours per week, the increases announced today will increase their annual gross pay by £1,505.54 and their monthly gross pay by £125.46.
Mandating the reporting of benefits in kind via payroll software
The government confirms that the use of payroll software to report and pay tax on benefits in kind will become mandatory, in phases, from April 2026.
This will apply to income tax and Class 1A NICs.
Tackling tax non-compliance in the umbrella company market
To address high levels of tax avoidance and fraud within the umbrella company sector, the government is introducing a new measure requiring recruitment agencies to handle PAYE for workers paid through umbrella companies. If no agency is involved, this responsibility will shift to the end client business.
Taking effect from April 2026, this measure aims to protect workers from unexpected tax bills resulting from the misconduct of non-compliant umbrella companies.
Taxation of Employee Ownership Trusts and Employee Benefit Trusts
The government is implementing a series of reforms to the taxation of Employee Ownership Trusts and Employee Benefit Trusts. These changes aim to prevent misuse, ensuring these frameworks stay aligned with their core purpose: promoting employee ownership and providing fair rewards to employees.
The changes will take effect from 30 October 2024.
Clarification of taxable status of Statutory Neonatal Care Pay
The government will legislate to clarify the Income Tax treatment of Statutory Neonatal Care Pay. This will ensure the payment is liable to Income Tax and ensure consistency with the tax treatment of other statutory maternity and paternity pay schemes.
Business Taxes in the 2024 Budget
Corporation Tax rates
The government has confirmed that Corporation Tax rates will remain unchanged. From April 2025, companies with profits over £250,000 will continue to pay the 25% main rate, while those with profits of £50,000 or less will pay the 19% small profits rate.
For companies with profits between £50,001 and £250,000, a marginal relief will apply, gradually increasing the effective Corporation Tax rate to ease the transition.
Capital allowances
The Full Expensing rules for companies allow a 100% write-off on qualifying expenditure on most plant and machinery (excluding cars) as long as it is new and unused. Similar rules apply to integral features and long life assets at a rate of 50%. The government will explore extending Full Expensing to assets bought for leasing or hiring, when fiscal conditions allow.
The Annual Investment Allowance is available to both incorporated and unincorporated businesses. It gives a 100% write-off on certain types of plant and machinery up to certain financial limits per 12-month period. The limit remains at £1 million.
The 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle charge points have been extended to 31 March 2026 for corporation tax purposes and 5 April 2026 for income tax purposes.
Business rates
For 2025/26, eligible retail, hospitality and leisure (RHL) properties in England will receive 40% relief on their business rates liability. RHL properties will be eligible to receive support up to a cash cap of £110,000 per business.
For 2025/26, the small business multiplier in England will be frozen at 49.9p. The standard multiplier will be increased to 55.5p.
Creative industries
From 1 April 2025, film and high-end TV productions will be able to claim an enhanced 39% rate of Audio-Visual Expenditure Credit (AVEC) on their UK visual effects (VFX) costs. UK VFX costs will be exempt from the AVEC’s 80% cap on qualifying expenditure. Costs incurred from 1 January 2025 will be eligible.
UK films with budgets under £15 million and a UK lead writer or director will be able to claim an enhanced 53% rate of AVEC from 1 April 2025. This is known as the Independent Film Tax Credit.
From 1 April 2025, the rates of Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief will be set at 40% for non-touring productions and 45% for touring productions and all orchestra productions, applying UK-wide.
Other Business Updates
The government will ensure shareholders cannot extract funds untaxed from close companies by legislating to remove opportunities to side-step the anti-avoidance rules attached to the loans to participators regime. This change will apply from 30 October 2024.
The government will support charitable giving by legislating to prevent abuse of the charity tax rules, ensuring that only the intended tax relief is given to charities. These changes will take effect from April 2026 to give charities time to adjust to the new rules.
From 30 October 2024, alternative finance tax rules will be amended to put certain tax consequences of alternative and conventional financing arrangements on a level playing field.
Capital Taxes in the 2024 Budget
Capital Gains Tax
The 2024 UK Budget announces that Capital Gains Tax rates will increase for disposals, other than of residential property and carried interest, made on or after 30 October 2024. The basic rate of 10% will increase to 18% and the 20% rate will increase to 24%.
No changes will be made to the rates applying to the disposal of residential properties of 18% and 24%.
The rate applying to trustees and personal representatives will increase from 20% to 24% from the same date.
The changes in the main rates of Capital Gains Tax brings them in line with those paid on disposal of residential property. This means that there will be no need going forward to differentiate between the types of property being disposed of.
Capital Gains Tax annual exemption
The annual exempt amount will remain at £3,000 for 2025/26.
Business Asset Disposal Relief and Investors’ Relief
The rate applying for individuals claiming Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14% for disposals made on or after 6 April 2025. The rate will increase again to 18% for disposals made on or after 6 April 2026.
In addition, the lifetime limit for Investors’ Relief will be reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. This limit takes into account any prior qualifying gains where the relief was claimed.
Carried interest rates and reform
The rates that apply to carried interest of 18% and 28% will increase to a flat rate of 32%. This will apply to carried interest arising to an individual on or after 6 April 2025.
From April 2026, all carried interest will be taxed within the income tax framework. A multiplier of 72.5% will be applied to any qualifying interest brought within the charge.
Capital Gains Tax on liquidation of a Limited Liability Partnership
Where a member of a Limited Liability Partnership (LLP) has contributed assets to the LLP, chargeable gains that accrue up to the contribution will be charged to tax when the LLP is liquidated and the assets are disposed of to the member, or a person connected to them. The charge to tax will be on the member and the measure will have effect for liquidations that commence on or after 30 October 2024.
Reducing tax-free overseas transfers of tax relieved UK pensions
The Overseas Transfer Charge (OTC) is a 25% tax charge on transfers to Qualifying Recognised Overseas Pension Schemes (QROPS), unless an exclusion from the charge applies. Transfers to QROPS established in the EEA and Gibraltar were included within the exclusion but this exclusion will no longer apply for such transfers made on or after 30 October 2024.
Company Vehicles in the 2024 Budget
Taxable benefits for company cars
The 2024 Budget signals rates of tax for company cars are also changing for 2025/26:
- The charge for zero emission cars rises from 2% to 3%.
- The charge for other cars increases by 1%.
- The maximum benefit of 37% remains.
The government has confirmed increases to the benefit in kind rates for company cars for tax years up to and including 2029/30.
Car fuel benefit charge
The government budget 2024 will uprate the car fuel benefit charge by CPI from 6 April 2025.
Treatment of double cab pick-up vehicles
The government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes.
From 1 April 2025 for Corporation Tax, and 6 April 2025 for Income Tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind and some deductions from business profits.
The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6 April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.
Company vans
The government budget 2024 announces that they will also uprate the Van Benefit Charge and the Van Fuel Benefit Charges by CPI from 6 April 2025.
Ending contrived car ownership schemes
The government will publish draft legislation relating to loopholes in car ownership arrangements, through which an employer or a third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period.
This arrangement means those benefiting don’t pay company car tax, which other employees pay, and so this measure will seek to level the playing field.
The changes will take effect from 6 April 2026.
Inheritance Tax in the 2024 Budget
Agricultural Property Relief & Business Property Relief
The government budget 2024 signals that From 6 April 2026, agricultural and business property will continue to benefit from the 100% Inheritance Tax relief up to a limit of £1 million. The limit is a combined limit for both agricultural and business property. Property in excess of the limit will benefit from a 50% relief, as will, in all circumstances, quoted shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM.
Extension of Agricultural Property Relief to environmental land management
From 6 April 2025, the existing scope of Agricultural Property Relief will be extended to land managed under an environmental agreement with, or on behalf of, the UK government, devolved governments, public bodies, local authorities, or approved responsible bodies.
Other UK Budget 2024 Points of Interest
The VAT registration threshold
From 1 April 2025 the VAT registration threshold remains at £90,000 and the deregistration threshold at £88,000.
Making Tax Digital for Income Tax Self-Assessment
The government is committed to delivering Making Tax Digital for Income Tax Self-Assessment, which is supposed to start in April 2026. The government will expand the rollout of the programme to those with incomes over £20,000 by the end of this Parliament and will set out the precise timing for this at a future fiscal event.
Business Asset Disposal Relief and Investors’ Relief
The rate applying for individuals claiming Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14% for disposals made on or after 6 April 2025. The rate will increase again to 18% for disposals made on or after 6 April 2026.
In addition, the lifetime limit for Investors’ Relief will be reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. This limit takes into account any prior qualifying gains where the relief was claimed.
