The UK’s Autumn Budget arrives at a pivotal moment for businesses navigating the challenges of the current economic climate. With adjustments to taxes, spending, and public sector investment, these measures will have a significant impact on the future of the nation’s small and medium-sized enterprises (SMEs).
For business owners, the question isn’t just about understanding the details of the Budget, but determining what to do in response. Here’s what SMEs need to know about the key measures and how they might influence operations in the coming months.
💼 National Insurance and Wage Pressures
Starting in April 2025, employers will face a 1.2% increase in National Insurance contributions, pushing the rate to 15%. This will raise costs for businesses with large payrolls. However, the increased Employment Allowance is now £10,500. This change provides support for smaller companies.
The simultaneous increase in the National Minimum Wage to £12.21 per hour further amplifies pressure on wage budgets. SMEs need to quickly assess their workforce structures and simplify their processes. They should also look into funding options to increase productivity and improve cash flow.
💼 Capital Gains Tax: A Game-Changer for Business Owners
Changes to Capital Gains Tax could have far-reaching implications, particularly for SMEs. Capital gains tax rates have increased. They are now 18% for lower bands and 24% for higher bands. The business asset disposal relief rate will rise to 14% starting in April 2025.
For owners considering selling business assets or raising capital, these adjustments may require rethinking timelines and strategies. Proactive financial planning and consultations with experts can minimise tax liabilities and align with long-term goals.
💼 Sector-Specific Opportunities
Despite the fiscal tightening, the Budget introduces targeted support for the retail, hospitality, and leisure sectors.
A permanent 40% Business Rates Relief is available, capped at £110,000. This relief helps industries that are struggling with rising costs and changing demand. It provides stability for these businesses.
The cut in Business Rates Relief from 75% to 40% will likely put pressure on small businesses not in these sectors. SMEs will need to carefully assess the impact on cash flow and explore cost-saving measures to ease the immediate impact and create a sustainable path forward.
What Next? It Depends on the Type of Finance
While the Budget offers a mix of challenges and opportunities, one thing is clear: SMEs need to act decisively. We need to use targeted relief to adapt to the new tax and wage environment. Focusing on growth-oriented investments is important.
These steps will help us move forward. The right commercial finance is important for small business owners. The cost of finance is a major part of a business's profit and loss accounts. Restructuring existing debts can help reduce the impact on profits.
At Charles & Dean, we help small and medium-sized businesses find financial solutions. Our goal is to help them succeed, even in tough times. We work with a wide range of Sole Traders, Limited Companies and PLCs.
Our Finance Specialists have significant knowledge of the products on offer and work closely with our funders, allowing them to present the right solutions that fit your needs and protect future growth. We utilise a wide range of finance products encompassing all business needs from traditional wheeled and tracked hard assets to secured and unsecured business loans for soft assets, fit-outs or cash flow.
Speak to one of our Finance Specialists today and start building a financial plan that works for your business' future.
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