The recent Autumn Budget introduced by Labour Chancellor Rachel Reeves has significant implications for UK business owners.
In our latest blog we discuss some of the key measures and how this impacts on business owners:
Increase in Employers’ National Insurance Contributions (NICs)
From April 2025, the rate of employers’ NICs will rise by 1.2 percentage points to 15%. Additionally, the secondary threshold – the point at which employers start paying NICs for each employee – will decrease from £9,100 to £5,000. This change is expected to increase operational costs for businesses, potentially affecting hiring and wage decisions.
Adjustments to Capital Gains Tax (CGT)
The Budget outlines plans to increase CGT rates, impacting business owners and investors planning to sell assets or exit investments. This change may influence decisions regarding the timing of asset disposals and necessitate strategic tax planning.
Reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR)
Modifications to APR and BPR are anticipated, which could affect the tax efficiency of transferring business assets, particularly in the agricultural sector. Business owners should review their succession planning strategies in light of these changes.
Impact on Employee Ownership Trusts (EOTs)
The Budget introduces reforms affecting EOTs, including stricter regulations to prevent former owners from retaining control post-sale, mandates for UK-resident trustees, and an extension of the relief clawback period. These changes aim to enhance EOTs as a succession model by ensuring fair tax practices and promoting genuine employee engagement.
National Living Wage Increase
The National Living Wage is set to rise to £12.21 per hour for adults over 21 from April 2025. While this benefits employees, it represents an additional cost for employers, particularly in sectors with a high proportion of low-wage workers.
Closing Thoughts
The Autumn Budget presents a series of changes that will affect business owners.
It is crucial for business owners to assess the impact of these measures on their operations and financial planning. Working with a financial adviser can help you develop tailored strategies to navigate these changes with confidence and clarity.
At Raymond James, Ribble Valley, we are committed to assisting our clients in understanding and adapting to these developments. Contact us for a free conversation.
Risk warning: With investment, your capital is at risk. The information in this blog does not constitute advice or a recommendation and you should not make any investment decisions on the basis of it. If you do however require advice we will of course be happy to assist.