How the 2024 Autumn Budget Will Impact Businesses

On 30th October, Rachel Reeves delivered the Labour Party’s first Autumn Budget in nearly 15 years. The Autumn Budget is an annual budget announcement from the chancellor that outlines fiscal policies aimed at supporting the UK economy, covering changes to taxes, investment plans, and priorities like the commitment to net zero.

The latest budget introduced various changes that UK businesses will need to consider, including adjustments to Capital Gains Tax, National Insurance, and minimum wage increases. These changes, while aimed at growth, will likely impose additional costs on employers—particularly small and medium-sized businesses—impacting budgets, growth, and perhaps even business insurance valuations.

To help you navigate the key changes, we’ve summarised the main business takeaways from the Autumn budget below.

Autumn Budget 2024 Summary for Businesses

Initial reactions to the budget reveal mixed responses. While some investors remain cautious about its potential impact on growth and profitability, businesses must plan for tax rises, minimum wage increases, and other significant changes as they look ahead to 2025.

National Insurance and Minimum Wage Increases

Employer National Insurance contributions will rise by 1.2%, bringing the rate up to 15% on earnings above £175. Additionally, the threshold for these contributions will lower from £9,100 to £5,000 annually, affecting many businesses.

The Employers’ Allowance will increase from £5,000 to £10,500, providing some relief for smaller businesses, but for companies with large workforces, higher payroll costs may present challenges. Many may consider scaling back hiring or limiting pay rises, potentially impacting workforce morale and productivity.

The national minimum wage will also rise by 6.7%, a welcome change for workers but a potential burden for businesses with tight margins, especially SMEs. With limited profit margins, many smaller businesses may find it difficult to absorb these additional costs without adjustments.

From a broker’s perspective, Premierline can support businesses in managing these impacts. Our team provides expert advice on risk management and insurance options to help UK businesses adapt effectively.

Capital Gains Tax

The Chancellor announced an increase in Capital Gains Tax (CGT) rates on carried interest to 32%, effective from April 2025. This change could influence asset management decisions, especially concerning shares, property, and other high-value assets.

While higher CGT rates may encourage businesses to hold assets longer, protecting against large tax liabilities, they could also deter investment in UK startups and SMEs. An elevated tax burden on profits may discourage investors, potentially limiting growth for early-stage businesses and stifling innovation in high-risk industries.

Proactive tax and risk management can be vital for business continuity, and insurance brokers can offer valuable guidance on strategies to manage cash flow and safeguard investments in light of these changes.

Corporation Tax Remains Stable

The Chancellor confirmed that Corporation Tax will remain unchanged. This stability will allow businesses to plan long-term and approach financial forecasting with greater confidence, which is crucial for growth.

Business Rates Reform

Reeves announced lower business rates for high street shops to level the playing field with online retailers. This change will be partly funded by a higher rate for the most valuable properties, such as distribution centres.

The government will reduce the business rates relief scheme discount from 75% to 40%, capped at £110,000 discount. Though businesses had hoped for a continuation of the 75% relief, this reduction will impact budgets when rates increase in April 2025.

Whether you need insurance for your high-street shop or for your online business our brokers can find the right insurance package to safeguard your business.

Research and Development Investments

The government has committed to over £20 billion in R&D funding, including investments in core sectors like engineering, biotechnology, and medical science. The consolidation of the SME R&D Tax Relief and R&D Expenditure Credit into a single scheme aims to streamline funding, giving businesses a clearer path to financial support for innovation.

This simplified approach can enhance cash flow and support long-term growth, especially for businesses focused on R&D. With fewer complexities, companies may find it easier to invest confidently in future innovations. Our range of commercial and industrial insurance packages are perfect for those involved in research and development.

Increased Windfall Tax

The increase in the windfall tax to 38% is expected to channel vital funds into economic and sector-specific growth initiatives, benefiting industries aligned with government priorities like infrastructure and energy efficiency. Reeves also added that the government will remove the 29% investment allowance to ensure that the gas and oil industries can protect jobs while supporting the UK’s energy security.

For businesses in areas such as green technology, construction, and those involved in government-backed contracts, this reallocation could provide a strategic boost, supporting expansion and resilience in a competitive market.

Energy-intensive sectors, such as hospitality—which has faced significant challenges in the post-COVID-19 landscape—stand to benefit from this policy as well. By alleviating the pressure of rising energy costs, the increased windfall tax offers these businesses relief, enabling them to better manage operational expenses and stabilise growth.

Autumn Budget 2024 Summary

With the Autumn Budgetnow in place, businesses have greater clarity for planning. While some business owners welcome wage increases, others are concerned about balancing these changes with tax hikes. This may lead some to cut costs elsewhere, potentially reducing insurance cover or other operational expenses.

According to BIBA’s 2023 Manifesto, 51% of businesses have already stopped purchasing at least one type of insurance cover, with 19% of SMEs reducing cover in the last year, increasing the risk of underinsurance.

If you’re concerned about post-budget business insurance, Premierline’s experts are ready to create a tailored package for your needs. Contact us today to protect your business confidently, with cover options suited to a wide range of industries.