Did you catch the latest Autumn Budget announcement? Whether you watched it live and found it all a bit overwhelming, or chose to skip it entirely, I’ve put together a summary of the key takeaways that might impact you. Not everything is announced during the live briefing, so it’s often worth waiting for the dust to settle, and seeing what other changes are to be implemented.
Business Taxes
Employers National Insurance Contributions
One of the biggest changes announced last week that impacts small business owners were related to Employers National Insurance and the Employment Allowance.
From 6 April 2024, the main Class 1 National Insurance Contribution (NIC) rate for employees is 8%, while the employer rate remains at 13.8%. However, from 6 April 2025, the employer NIC rate will increase to 15%.
The Secondary Threshold, the earnings level at which employers start paying NICs on an employee’s income, is currently set at £9,100 per year. This will be lowered to £5,000 annually from 6 April 2025 until 6 April 2028, after which it will adjust in line with the Consumer Price Index (CPI).
The Employment Allowance, which currently provides businesses with annual employer NIC bills of £100,000 or less with a £5,000 deduction, will increase to £10,500 from 6 April 2025. Additionally, the £100,000 threshold will be removed, extending the allowance to all eligible employers with employer NIC bills.
Corporation Tax
The government has confirmed that Corporation Tax rates will remain unchanged. Starting from April 2025, companies with profits over £250,000 will continue to pay the 25% rate. A reduced rate of 19% will apply to companies with profits of £50,000 or less. For companies with profits between £50,001 and £250,000, a marginal relief will reduce the main rate, resulting in a gradual increase in the effective Corporation Tax rate for this range.
Capital Gains Tax for Businesses
- Lower rate: Increased from 10% to 18%.
- Higher rate: Increased from 20% to 24%.
Business Asset Disposal Relief
This will remain at £1 million, but the tax rate on qualifying assets will rise from 10% to 14% in April 2025 and again to 18% in April 2026.
Private Equity
Tax on profit shares from successful private equity deals will go up from 28% to 32%.
Wages, Benefits, and Pensions
- Minimum Wage: For those aged 21 and over, the hourly rate will rise from £11.44 to £12.21 in April. For 18 to 20 year olds, it will increase from £8.60 to £10.
- State Pensions: Basic and new state pension payments will see a 4.1% increase next year.
Making Tax Digital for Income Tax (MTD for IT)
Millions of business owners and landlords will change the way they report their earnings to HMRC over the next few years, and this was confirmed during the Autumn Budget.
All self-employed individuals and landlords with incomes of over £20,000 will now be included in MTD IT by the end of this parliament.
MTD IT will replace the current Self Assessment system for business owners and landlords in stages, depending on their incomes (not profit):
- From April 2026 (tax year 2026/27) – all self-employed individuals and landlords with income over £50,000
- From April 2027 (tax year 2027/28) – all self-employed individuals and landlords with income over £30,000
- By the end of this parliament (2029 at the latest) – all self-employed individuals and landlords with income over £20,000
The announcement to include businesses with an income of more than £20,000 represents a new addition to previously announced plans.
There was no update in the Budget about when Partnerships will be required to join, nor were there further details on MTD for Corporation Tax for companies.
To comply with MTD IT self-employed individuals and landlords will have to take these actions:
- Keep records of their business income and expenses in a digital format.
- For each type of revenue (self-employed business or property), send quarterly updates of business income and expenses to HMRC.
- Finalise business income by submitting a final declaration.
- Pay the tax you owe by 31st January of the following tax year (so no change from the current Self Assessment process in this area).
Personal Taxes
The basic tax rate is set at 20%. For the 2025/26 tax year, this rate applies to income up to £37,700, which means that individuals eligible for the full personal allowance of £12,570 will start paying the 40% higher rate on income above £50,270.
The basic rate band will stay frozen at £37,700 until April 2028. Similarly, the National Insurance Upper Earnings Limit and Upper Profits Limit will remain in line with the higher rate threshold at £50,270 until that time. Starting in April 2028, these limits are expected to increase in line with inflation.
For the 2025/26 tax year, the threshold for the additional rate of 45% will be £125,140. In England, Wales, and Northern Ireland, this additional rate will apply to non-savings and non-dividend income, while the additional rate for savings and dividend income will apply across the entire UK.
Capital Gains Tax
Rates are set to rise for disposals made on or after 30 October 2024, excluding residential property and carried interest. The basic rate will go up from 10% to 18%, and the higher rate will increase from 20% to 24%.
There will be no changes to the rates for residential property disposals, which remain at 18% and 24%. However, the rate for trustees and personal representatives will also increase from 20% to 24% from the same date.
The annual exempt amount will remain at £3,000 for 2025/26.
Inheritance tax
The nil rate band has remained at £325,000 since 2009 and will continue to be frozen at this level until 5 April 2030. Additionally, the ‘residence nil rate band’ remains fixed at £175,000, along with the taper threshold for the residence nil rate band, which begins at £2 million. These amounts are also frozen until 5 April 2030.
Transport
- Fuel Duty: Frozen for another year.
- Air Passenger Duty:
- Short-haul economy flights – increasing by £2
- Long-haul flights – increasing by £12
- Private jets – a 50% increase in duty
If you’re concerned about how these changes could impact your business, feel free to reach out. We can help you prepare a budget to adapt to these new regulations, so there are no surprises next year!