One of Weybridge’s leading firms of accountants MGI Midgley Snelling LLP is urging employers to prepare for the serious impact of the Chancellor’s Autumn Budget.
Rising to address Parliament, Rachel Reeves recognised that the Government had a responsibility to “restore stability to our economy” in response to the “black hole” left by the Conservative Party.
While employees may breathe a sigh of relief that their National Insurance Contributions (NICs) will not be affected, the same cannot be said for employers.
The Chancellor revealed that from April 2025, the Employers’ National Insurance rate will increase from 13.8 per cent to 15 per cent, while the threshold at which employers begin paying NICs will be lowered from £9,100 to £5,000.
Despite this change intending to help repair public finances and raise necessary revenue for funding public services, MGI Midgley Snelling LLP believes it places an unnecessary burden on SMEs that are still recovering from the economic fallout from the pandemic.
Sarah Squires, Partner at MGI Midgley Snelling LLP, said: “The rise in Employers’ National Insurance Contributions and the dramatic reduction in the threshold will undoubtedly strain the finances of many SMEs.
“While it is encouraging to see recognition of the important role that small businesses play in our economy, the practical implications of this budget fall short of providing meaningful support.
“These changes could force employers across the UK to reconsider hiring and wage plans, ultimately suppressing growth and investment in the economy.”
To alleviate some of the burden on small businesses, the Government has announced an increase in the Employment Allowance from £5,000 to £10,500, while removing the previous £100,000 threshold.
“While this is a step in the right direction, it does not fully mitigate the impact of rising costs that many SMEs will face,” added Sarah.
“The reality is that many companies are already struggling with high inflation rates and the cost-of-living crisis, and this added financial pressure could hinder their recovery and growth plans.”
The Budget also addressed an issue many business owners feared leading up to the announcement – a rise in Capital Gains Tax rates.
Rachel Reeves announced that effective immediately, the lower CGT rate will increase from 10 per cent to 18 per cent with the higher rate rising to 24 from 20 per cent.
The rates for Business Asset Disposal Relief (BADR) will also gradually increase, reaching 14 per cent in April 2025 and matching the main lower rate of 18 per cent by April 2026. The BADR lifetime allowance remains at £1 million.
Additionally, the Inheritance Tax (IHT) reliefs that were previously available through Agricultural Property Relief and Business Relief have now been restricted. You now get 100 per cent relief on all assets up to £1 million, while all assets above £1 million will only receive 50 percent.
Additional dwellings Stamp Duty Land Tax will also increase from 3 per cent to 5 per cent affecting those looking to start or expand an existing property portfolio.
These changes create a pressing timeline for business owners looking to maximise their returns from a business disposal before these rates increase.
MGI Midgley Snelling LLP encourages all business owners to assess their exit strategies and consider selling sooner rather than later to take advantage of current tax reliefs.
“For business owners thinking about selling, now is the time to act. If you’re considering a sale, you’ll want to do it before April 2026 to take advantage of the Business Asset Disposal Relief.
“It’s really important for business owners to think ahead. Not only will you need to create strategic plans for running your business, but you should also consider drafting a suitable exit plan, perhaps a management buyout,” Sarah added.
As if these changes were not enough to cause concern, starting April 2027, pensions passed on as inheritance will no longer be exempt from IHT.
Furthermore, the non-dom (non-domicile) regime is being abolished in its entirety from April 2025, including an end to the use of offshore trusts to shelter assets from Inheritance Tax.
Do you want to know how the measures announced in the Autumn Budget affect you? Find out how MGI Midgley Snelling LLP can help by getting in touch!
