The 2024 Autumn Budget, delivered by Chancellor Rachel Reeves, was long-awaited for businesses keen to understand how the new Government will prioritise growth. In this guide, we explore the key changes and their implications for companies in Wales.
This article has been prepared by one of our specialist project partners, Joel Dunning (Director - Head of GS Verde Tax & Accountants), GS Verde, who offers expert insights to help businesses navigate these updates. Here’s a breakdown of the critical changes you need to know about:
Key updates for businesses
1. National Insurance Contributions (NICs):
- Employer NICs will rise by 1.2%, from 13.8% to 15%, effective 6 April 2024.
- The threshold for smaller businesses to claim relief has been expanded, with a new cap of £10,500.
2. Corporation Tax:
- Corporation tax remains capped at 25% for the duration of the current government.
- Research and Development (R&D) tax incentives stay unchanged, encouraging innovation investment.
3. Business Rates:
- The 75% business rate discount will be reduced to 40% in April 2025, with a cap of £110,000.
Impact on individuals
Minimum Wage Increase:
- From April 2025, the minimum wage for those aged 21 and over will rise to £12.21 per hour, a 6.7% increase.
Capital Gains Tax (CGT):
- Starting on 30 October 2024, CGT rates on asset sales will increase to 18% (lower rate) and 24% (higher rate).
- Business Asset Disposal Relief (BADR) rates will climb to 14% in 2025 and 18% in 2026.
Inheritance Tax (IHT):
- IHT thresholds remain frozen until 2030, with changes to Business Property Relief and Agricultural Property Relief coming in 2027 for assets valued over £1 million.
Updates to Employee Ownership Trusts (EOTs)
EOTs saw several significant updates in this Budget, including:
- Extended Compliance Period: CGT relief qualifying conditions apply for four tax years after the sale, introducing a longer risk period for sellers.
- Increased Disclosure Requirements: Sellers must now provide detailed data during their CGT relief claim, including employee numbers and agreed purchase prices.
- UK Residency Requirement: Trustees must be UK residents at the time of sale to qualify for tax relief.
Despite these changes, EOTs remain a tax-efficient and attractive exit option. They offer benefits such as cultural continuity, employee engagement, and tax-free annual bonuses of up to £3,600 for employees.
What this means for business owners
Businesses face a shifting landscape with higher employer costs (through NICs and wage increases) plus changes to CGT and EOT compliance. However, these measures provide clarity and stability, offering a foundation for strategic planning, investment, and growth.
EOTs continue to present significant advantages for those considering succession planning, enabling business owners to exit tax efficiently while fostering a collaborative and purpose-driven workplace.
Next Steps: Support for navigating change
As the fiscal environment evolves, preparation is key. For businesses looking to adapt, whether through revised budgets, investment strategies, or exploring EOTs as an exit strategy, the Business Wales Accelerated Growth Programme is here to help.
Speak to your AGP relationship manager to discuss how these changes may affect your business and explore tailored support to align with your growth ambitions.