Autumn 2024 Budget
The 2024 Autumn budget seeks to raise £40 billion in taxes, mainly through an increase in Employers’ National Insurance Contributions (NICs) and Capital Gains Tax. We have summarised the key points below.
IMPACT ON BUSINESSES
Employers’ National Insurance (changes from 6th April 2025):
Rate Increase: The main rate of Employer NIC will rise from 13.8% to 15%.
Secondary Threshold Decrease: Threshold at which employers start paying Ers NI reduces from £9,100 to £5,000 until April 2028.
Employment Allowance Increase: The allowance for small businesses will increase from £5,000 to £10,500 and extend to all eligible businesses by removing the £100,000 eligibility threshold.
Example: NIC Calculation for a Small Business with 5 Employees on £30,000 Annual Salary:
Savings: This business would save £1,170 under the new rules (£9,420 - £8,250).
Millward May: A lot of businesses will see an increase in their employer NIC bill, however some may see a reduction, especially if they are a small business. We have prepared an excel calculator where you can estimate the impact by inputting your gross wage bill and number of employees, click the following link to download it: Employers NI Calculator
Corporation Tax
The government have committed to maintain Corporation tax rates at 19% for profits below £50,000 and 25% for taxable profits above £250,000 throughout their term.
Millward May: We examined the impact of corporation tax rate changes in a previous newsletter here: www.millwardmay.co.uk/news/2023/5/18/corporation-tax-changes
National Living Wage
From April 2025, the National Living Wage will increase as follows (per hour):
£12.21 for those 21 years old and over (£0.77 or 6.7% increase)
£10 for those aged 18-20 years old (£1.40 or 16.3%)
£7.55 for those aged 16-17 years old (£1.15 or 18%)
£7.55 for apprentices under 19 or in the first year of their apprenticeship (£1.15 or 18%)
Millward May: We advise all employers to check they are paying the correct amounts to their employees. You can use the government calculator here: https://checkyourpay.campaign.gov.uk/. If you have any questions or concerns, you can email our payroll team at payroll@millwardmay.co.uk
Capital allowances
The Budget continues to support carbon reduction efforts, maintaining the 100% First-Year Allowance on zero-emission company cars and electric vehicle (EV) charging points for another year until 5 April 2026.
Millward May: Electric company vehicles are currently very tax efficient – speak to us for more information.
Benefits in kind (P11D) on company cars
The rate of tax for company cars is increasing from 2025/26:
Zero emission cars – rising to 3% from 2%
Other cars – increasing by 1%
Double cab pick-up vehicles with a payload of one tonne or more will be treated as cars and not vans from April 2025. Existing capital allowances/benefit in kind treatment will apply to those who purchase double-cab pickups before April 2025- they will be able to use the previous treatment until the earlier of disposal, lease expiry or 5 April 2029.
Millward May: Before deciding whether to purchase a car through the company or personally, it is worthwhile doing a thorough review of the tax situation. We can help our clients understand which option might suit them.
Business rates
The small business multiplier will be frozen at 49.9p whilst the standard multiplier will be increased to 55.5p. Eligible retail, hospitality and leisure properties will receive 40% relief on their rates liability.
IMPACT ON INDIVIDUALS
Dividend tax
There are no changes for dividend tax rates. The £500 tax-free dividend allowance remains for 2025/26. Dividends received above the allowance are taxed at the following rates:
8.75% for basic rate taxpayers
33.75% for higher rate taxpayers
39.35% for additional rate taxpayers.
Self-employed
The Class 4 NIC rates of 6% and 2% remain the same from April 2025. Self-employed people with profits of £6,725 and over will receive a qualifying year towards their state pension without paying Class 2 NICs. Those will profits under this level, can voluntarily pay Class 2 NICs to receive a qualifying year. You currently need 35 qualifying years to receive a full state pension.
Capital Gains Tax
There were immediate increases in capital gains tax:
The lower tax rate has risen from 10% to 18% from 30 October 2024
The higher tax rate has risen from 20% to 24% from 30 October 2024
No changes will be made to the rates applying to the disposal of residential properties of 18% and 24%.
The tax rate applying to Business Asset Disposal Relief will increase from 10% to 14% on 6 April 2025 and a further increase again to 18% after 6 April 2026.
The annual exempt amount will remain at £3,000 for 2025/26
Millward May: If you are considering closing your business to access the business asset disposal relief over the next few years, it may be worth factoring the timing of this based on the changes coming in.
Stamp Duty
Additional stamp duty on second homes, buy-to-let properties, and company-owned residential property has increased from 3% to 5%.
Millward May: With the restriction of mortgage interest relief for higher rate taxpayers in recent years, the government continue to increase taxes on buy-to-let landlords.
Inheritance Tax
Inheritance tax thresholds are frozen for a further 2 years until 2030. However, unspent pension pots will now be included in estate valuations, making them potentially liable for inheritance tax—a significant consideration for estate planning.
Making Tax Digital (MTD)
Making Tax Digital for small businesses will still come in from April 2026. The sales threshold at which this applies to small businesses and landlords has been reduced now to £20,000 and will be reviewed in future.
Millward May: We would recommend using bookkeeping software for your sole trade or Limited Company business. You can still get FreeAgent for free if you have a Mettle or Natwest bank account. A Mettle bank account is also free! We can help setup the software for our monthly fee clients for no additional charge.