Today’s Autumn Budget from Chancellor Rachel Reeves was a mix of good news, surprises, and a few curveballs for small businesses.
Business rates relief: Small businesses in retail, hospitality, and leisure get a break with a 40% reduction in business rates for 2025-26, capped at £110,000 per business. Plus, starting in 2026, lower tax rates will permanently apply to properties in these sectors. This aims to support high streets and local businesses, though some in hospitality feel it’s not enough amid rising operational costs
Corporate tax stability: The headline corporate tax rate remains capped at 25%, keeping it steady for the foreseeable future. For smaller businesses, the existing small profits rate is preserved, and full expensing for capital investments is here to stay, which is great for companies planning big purchases
National Insurance and Living Wage Increases: From April 2025, employer National Insurance rates will rise to 15%, paired with an increase in the National Living Wage to £12.21 per hour. While this bolsters employee wages, it means higher payroll costs for small businesses, potentially squeezing budgets for growth and hiring
Capital Gains and inheritance tax changes: Capital Gains Tax rates are creeping up, with lower rates moving from 10% to 18% and higher rates to 24% by April 2025. Meanwhile, for business property, a new £1 million threshold applies for inheritance tax relief. This may hit family businesses harder, but the changes don’t kick in immediately, offering some time to prepare
Fuel and alcohol duty adjustments: Fuel duty will stay frozen for another year, a relief for businesses dependent on transport. However, while draft alcohol duty drops to support pubs and breweries, duties on non-draught drinks will rise with inflation, a nod to helping hospitality
The Autumn Budget 2024 presents a mixed outlook, especially for smaller businesses that may feel the impact of wage and tax increases more acutely. While investment incentives and rate relief offer some breathing room, it’s a balancing act as businesses navigate rising costs alongside potential growth opportunities.
