The latest Autumn Budget has brought several updates that could affect your business finances and planning.
Here’s a breakdown of the most relevant changes and how they may impact you as a small business owner.
1. Capital Gains Tax (CGT)
- General Asset Sales: The CGT rate has increased, now sitting at 18% for the basic rate and 24% for the higher rate. This will apply to assets like shares and business interests.
- Property Investors: Rates for residential property gains remain the same at 18% (basic) and 24% (higher). Stability here means a bit of a breather for property investors.
- Planning for Sales: If you’re considering selling any high-value assets or business interests, these new rates mean tax planning has become even more essential.
2. Inheritance Tax (IHT) Tweaks
- Relief Caps: Business Property Relief and Agricultural Property Relief will see changes from April 2026. Up to £1 million in assets will still receive 100% relief, but anything beyond that will now only qualify for 50% relief.
- Including Pensions: Inherited pensions will be included under IHT from April 2025, which may increase estate tax liabilities.
- Frozen Thresholds: The IHT nil-rate band remains at £325,000 until 2030, with an additional £175,000 for family home allowances.
💡Tip: If you’re planning for generational wealth transfer, now may be the time to reassess your approach with these changes on the horizon.
3. National Living Wage & Minimum Wages
Starting in April 2025:
- 21 and Over: £12.21 per hour (up from £11.44)
- 18-20 Year-Olds: £10.00 per hour (up from £8.60)
- Under 18s & Apprentices: £7.55 per hour (up from £6.40)
These increases mean payroll budgets may need adjusting, particularly for small businesses with entry-level or minimum-wage staff. Reviewing forecasts now can help ensure smoother budgeting later.
4. Employer National Insurance Contributions (NICs)
From April 2025:
- Allowance Bump: The NIC allowance will double, rising from £5,000 to £10,500, offering more relief for small businesses.
- Threshold Lowered: Employer NICs will apply on salaries above £5,000 (previously £9,100), increasing NIC expenses per employee.
- Rate Increase: The rate of employer NICs will rise to 15% (from 13.8%).
While the increased allowance offers some relief, the combination of a higher rate and lower threshold may mean an uptick in staffing costs.
For PPF Clients, we will do a full review and be in touch to discuss any changes to ensure tax efficency.
5. New VAT on Private School Fees
Families with children in private education should note that VAT will now apply to private school fees, adding a potential cost for parents in this category.
6. Non-Dom Tax Regime Ending
The UK will shift to a residence-based model in April 2025, meaning long-term UK residents will no longer benefit from the current non-dom tax regime.
7. Company Vehicles & Employee Benefits
Changes are coming for double cab pick-up vehicles (DCPUs), which will now be treated as cars for certain tax purposes from April 2025. For businesses with DCPUs, updated capital allowances and benefits-in-kind arrangements may impact tax obligations.
Additionally, from 2026, employers will be required to use payroll software to report and pay tax on benefits in kind, which may mean a shift in your reporting methods if you’re not already using payroll software. Once again, for PPF clients we’ve got this covered!
Final Thoughts: What Should You Do?
The autumn budget updates bring both new opportunities and challenges for small businesses, affecting everything from staffing costs to tax planning and financial strategy.
To prepare, think about:
- Reviewing your budget for wage increases and NIC changes.
- Reassessing any planned asset sales or transfers to optimise around CGT and IHT changes.
- Exploring how VAT, employee benefits, and vehicle changes could impact your business’s cash flow and operational choices.
Staying informed and proactive is the best way to adapt, so don’t hesitate to reach out if you’d like personalised advice on any of these points!
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