What the 2024 Autumn Statement means for small businesses

On Wednesday 30 October, Chancellor Rachel Reeves gave a speech to the House of Commons unveiling the 2024 Autumn Statement.

The Chancellor of the Exchequer is the government's chief financial minister, and the autumn statement is their opportunity to set out plans for the UK economy.

An overview of the 2024 Autumn Statement

This year’s budget announcement was historic for two reasons. Firstly, because it marks the first Labour government budget for 14 years since their landslide win. And secondly, this was the first time a female Chancellor of the Exchequer delivered the budget.

The Office for Budget Responsibility (OBR) also publishes its economic and fiscal outlook on the same day. As the independent public finances forecaster, this is their independent assessment of the expected impact of the policies announced in the statement.

The OBR makes an independent announcement as a sort of checking and balancing exercise, holding the Chancellor of the Exchequer and Treasury accountable on behalf of the public. It forecasts on assumptions, including what’s in the budget and what it thinks will happen to oil and gas prices as to whether the UK's economy will grow or shrink.

These predictions may not come to pass, but it’s effectively a best guess.

After assessing this budget, the OBR predicts the UK economy will grow this year by 1.1%, by 2% next year and 1.8% in 2026. This year, inflation is predicted to average 2.5%, 2.6% next year, and 2.3% in 2026.

Delivered against the backdrop of a continuing cost-of-living crisis, higher than typical interest rates and talk of a £22 billion black hole in public coffers from the previous government, Reeves announced tax rises worth £40 billion aiming to restore “stability to our public finances and rebuilding our public services”.

But how do these plans affect small businesses, the self-employed and landlords? Read on to find out:

Skip ahead:

• Employers' National Insurance rises
• Changes to national minimum wage
• Freeze on NI and income tax thresholds
• Corporation Tax freeze
• Capital Gains rises
• Stamp duty rises
• Alcohol tax
• Fuel duty freeze

Employers' National Insurance rises

If you’re an employer, you’ll see a few changes to the employers’ National Insurance (NI) contributions you make from April 2025.

Firstly, the contributions you make will rise from 13.8% to 15% and the payment threshold will decrease from £9,100 to £5,000. As an employer, this means you’ll pay NI at 15% for salaries over £5,000.

However, your employment allowance — the tool that allows smaller employers to reduce their National Insurance liability — will increase from £5,000 to £10,500.

Impacted: employers.

Changes to national minimum wage

The legal minimum amount that can be paid to workers who are 21 and over, known as the National Living Wage, will increase from April 2024.

A 16.3% increase to the national minimum wage paid to workers aged between 18-20 will also be made.

For employees, this will bring the rates to:

Impacted: employees, and employers paying National Living Wage.

Freeze on NI and income tax thresholds

The National Insurance threshold is the income level when a working person begins to pay National Insurance. There are different “classes” of NI, and the type workers pay depends on the “class” they fall into and how much they earn.

Learn more about National Insurance contributions for the self-employed.

Similarly, the income tax threshold is the income level when a working person begins to pay income taxes. In the UK, the current threshold is £12,570 — aka your tax-free Personal Allowance — if you earn more than this you must pay income tax.

In 2022, the Conservative government pledged to freeze these thresholds until 2028, and while there was speculation that Reeves would continue this freeze, she has said that after 2028 both of these thresholds will go up in line with inflation.

Why does this matter? Well, unfreezing these thresholds will prevent more people from being pulled into higher tax bands as wages rise.

The changes to income tax don’t impact employees or the self-employed in Scotland, as it has its own rules.

Impacted: employees and the self-employed.

Corporation Tax freeze

Corporation Tax is the money a company pays to HM Revenue and Customs (HMRC) on its profits. How much you pay will depend on the profits you make.

Companies with taxable profits over £250,000 pay what’s called the “main rate” which sits at 25%. This rate will remain at 25% until the next election.

Impacted: businesses with taxable profits over £250,000.

Capital Gains rises

Capital Gains is a tax you pay when you sell, gift or swap an asset that's increased in value. It covers most personal possessions valued at over £6,000 (except cars) — for example, paintings or antiques — but also covers second properties, shares and business assets.

The amount of money you receive from the sale is not taxed, but the gain you make is taxed.

Effective immediately, the Capital Gains for higher-rate taxpayers will increase by 4% to 24%. For lower-rate taxpayers, it will rise by 8% to 18%.

For landlords and homeowners, the Capital Gains rates on residential property will remain at 24% and 18%.

Impacted: taxpayers, shareholders and landlords.

Stamp duty rises

From 31 October 2024, the stamp duty land surcharge for second homes and investment properties will rise from 3% to 5%.

After the Autumn Statement, director at property site Rightmove, Tim Bannister said, “Increasing stamp duty on additional home purchases by 2% means that, based on the average asking price for a home (£371,958), a landlord could face an additional charge of more than £7,000 from tomorrow when buying a property.”

Impacted: landlords.

Alcohol tax

For pubs, restaurants and retailers selling alcoholic drinks, there are a couple of changes you’ll need to be aware of.

Firstly, the duty rates on non-draught alcohol — which includes wine, spirits and bottled or canned cider and beer — will increase in line with Retail Price Inflation (RPI).

The RPI is one of two measures of consumer inflation and is higher than the Consumer Price Inflation (CPI) as it takes into account home ownership costs. In September 2024, the RPI sat at 2.7%, but this could change by the time this comes into effect.

Secondly, the duty on draught alcoholic drinks has been cut by 1.7%, which the Chancellor said will see “a penny off a pint in the pub”.

Both of these changes will take effect from February 2025.

Impacted: pubs, restaurants and retailers selling alcoholic drinks.

Fuel duty freeze

The 5p cut to fuel duty on petrol and diesel was due to end in April 2025. This 5p cut will remain for another year.

Impacted: drivers.

Source: Gov.uk