Budget Breakdown 2024: Key Impacts for Small and Large UK Businesses

Key Budget Points for Small Businesses

1. Relief for Retail, Hospitality, and Leisure Sectors
   To support SMEs in high-street sectors, a 40% reduction in business rates has been introduced for retail, hospitality, and leisure properties, effective from 2025. An additional permanent tax reduction for these businesses is planned for 2026, addressing sector-specific hardships​.

2. Employment Allowance and NIC Adjustments
   The Employment Allowance has doubled from £5,000 to £10,000, allowing SMEs with limited payrolls to avoid NIC increases. However, employers will need to carefully balance this relief against rising minimum wage costs​.

3. Business Property Relief Cap
   From 2026, Business Property Relief will apply at 50% for assets over £1 million. For many family-run small businesses, this will mean re-evaluating intergenerational transfer plans to minimise exposure to inheritance tax​.

4. Minimum Wage and Employment Costs
   From April 2025, the National Living Wage will rise to £12.21 per hour. While beneficial to employees, this increase, combined with the NIC changes, places further pressure on small businesses, especially in labour-intensive sectors like retail and hospitality​.

Pros and Cons of the Budget

Pros

• Stable Corporate Tax Rate: Retaining the 25% corporate tax cap offers stability for businesses to plan long-term investments.
• Increased Employment Allowance: Doubling the Employment Allowance offers small businesses much-needed relief from NIC obligations.
• Support for High-Street Sectors: The 40% rate relief for the hospitality, retail, and leisure sectors is a welcome buffer for businesses hit hard by recent economic challenges​.

Cons

• Increased Tax Burden: Higher CGT rates, NIC increases, and adjustments to business property relief all raise operational costs, which may deter growth.
• Abolition of Non-Dom Regime: This may lead to a talent drain in sectors that rely heavily on international expertise.
• Wage Pressure on Small Businesses: The hike in the National Living Wage, though beneficial to employees, creates a financial strain on SMEs already facing rising operational costs​.

Expert Opinion and Advice for Business Owners

This budget offers a balanced but cautious path forward. While larger corporations may benefit from the continued corporate tax cap, small businesses face challenges in adjusting to rising employment costs. Here’s some prudent advice:

• Plan Ahead for Tax Increases: Small businesses should prepare for the April 2025 changes by assessing cash flow and potential cost-saving measures.
• Capitalise on Investment Reliefs: With full expensing remaining in place, businesses should consider upgrading assets now to maximise tax efficiency.
• Reassess Talent Strategy: For large businesses that rely on international talent, preparing a retention strategy in response to the removal of the non-dom regime is crucial.

Economic Forecast for 2025

As the UK navigates these changes, the coming year may see moderate growth as businesses and investors adapt. Higher wages and relief measures for the retail and hospitality sectors could stimulate consumer spending, potentially boosting small business revenues. However, the overall tax burden increase may temper business expansion, particularly among smaller enterprises. For sectors with heavy international staff, challenges around employee retention could surface, creating demand for more competitive benefits​

References

1. Gov.uk – Autumn Budget 2024
2. Small Business UK – Key Announcements
3. KPMG UK – Budget Analysis
4. Accountancy Age – Industry Reactions