How will the budget impact businesses?

How will the Autumn 2024 budget impact businesses?

The UK government have revealed the 2024 Autumn budget, and from this budget announcement, what are the potential impacts that businesses could face as a result?

How the changes in taxes may affect businesses?

National insurance tax thresholds have been frozen until 2028, meaning that business owners could face higher tax rates as their income grows.

The rise in capital gains tax from up to 20% to up to 24% on profits directly from selling shares may change how attractive these transactions are.

How the changes in business taxes may affect businesses?

Lowering the threshold for National Insurance on workers’ earnings from £9,100 to £5,000 as well as increasing the rate from 13.8% to 15% could increase costs for small businesses, potentially leading to tighter budgets or reduced efficiency, and a depleted cash flow.

The increase in the employment allowance from £5,000 to £10,500 allows businesses to offset some of their National Insurance liabilities, providing a modest relief, potentially making business operations more comfortable.

The higher tax for private equity managers may primarily affect private equity firms, it may indirectly impact SMEs seeking investment, as higher taxes may influence the investment strategies of larger firms.

Maintaining the corporation tax rate at 25% for profits over £250,000 gives stability for businesses in planning their finances, however it may still put a financial pressure on those operating at a higher profit level.

How will the overall economic outlook affect businesses?

The projected economic growth of 1.1% for this year and 2% next year is promising, potentially creating increased demand for both product and service-based businesses. However, businesses must not overstretch themselves to take on this growth opportunity.

With inflation averaging around 2.5% this year and slightly decreasing in the years to follow, businesses may face rising costs. Effective cost management will be essential to maintain profitability in an environment faced with inflationary pressures.

Overall, while some measures may offer relief, businesses will need to navigate increased tax liabilities and economic changes carefully to sustain and create growth and stability.

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