On 30th October 2024, Rachel Reeves made history as the first female Chancellor of the Exchequer to deliver a Budget speech. The occasion was significant on many levels, but as the speech concluded, it left mixed feelings among business owners. While the Budget had its silver linings for workers, many businesses will face new financial challenges.
Addressing the Public Finance Deficit
From the outset, the Chancellor addressed the difficult decisions ahead, pointing to the £22 billion deficit in public finances left by the previous government. Despite these challenges, the Budget perhaps didn’t feel as taxing as we may have feared. The main revenue-raising measure, an increase in Employers’ National Insurance (NI), was no surprise, having been signalled well in advance.
Stability for Workers, Challenges for Businesses
For employees, the Budget maintained the status quo, with no increases to income tax, national insurance, or VAT. The previous government’s freeze on personal allowances and tax rate bands remains, which means as wages rise, more income could be taxed at higher rates through ‘fiscal drag.’ However, from 2028-29, the Chancellor has pledged to index personal tax thresholds to inflation once more, a small win for taxpayers down the line.
Businesses, on the other hand, have been hit harder, mainly due to the rise in Employers’ NI contributions and an increase in minimum wage rates.
Retail, Hospitality, and Leisure – A Mixed Bag of Support
Retail, hospitality, and leisure (RHL) businesses saw some targeted relief, including a 40% discount on business rates, capped at £110,000 per business, alongside a freeze on the small business multiplier in 2025-26. Looking forward, the government plans to establish permanently reduced tax rates for RHL properties by 2026-27, which could provide long-term relief to these sectors.
New Opportunities for Contracts and Public Services
On a positive note, the Budget also announced investments in public services and home building, which could open doors for contracts and opportunities across various sectors.
How Will the Budget Impact Your Business?
If you’re wondering how these changes might affect your business, especially around payroll costs and tax planning, get in touch with A&C Chartered Accountants. We’re here to offer clear guidance and personalised advice, ensuring your business is well-prepared and equipped for the financial landscape ahead.