Yesterday, The Autumn Budget was announced. It outlines significant tax changes and incentives aimed at businesses and workers. Here’s a breakdown of the top announcements affecting UK businesses.
National Insurance Increase: Employers’ National Insurance contributions will rise by 1.2% to 15%. Additionally, the Secondary Threshold will be reduced from £9,100 to £5,000, meaning employers will begin paying NI sooner on employee earnings. To help offset costs, the Employment Allowance will increase from £5,000 to £10,500, which could exempt about 865,000 employers from paying NI altogether next year.
Business Asset Disposal Relief: This relief, capped at a lifetime limit of £1 million, will remain at 10% this year but will increase to 14% in April 2025 and 18% in 2026-27. This change, aimed at supporting entrepreneurial investment, is expected to generate £2.5 billion in revenue.
Corporation Tax and Business Rates: Corporation tax remains capped at 25%. Meanwhile, from 2026-27, the retail, hospitality, and leisure sectors will benefit from two reduced tax rates for business rates, offset by a higher multiplier for higher-value properties.
National Living Wage: Set to increase by 6.7%, bringing the hourly rate to £12.21, which impacts labour costs for businesses, particularly in sectors with a high proportion of minimum wage roles.
Income Tax Thresholds: Instead of freezing income tax thresholds, the government will adjust them for inflation post-2027-28, which could indirectly impact disposable incomes and consumer spending.
IR35 and Umbrella Companies: To prevent umbrella companies from exploiting workers, new legislation set to begin in April 2026 will transfer responsibility for PAYE compliance. Recruitment agencies that engage with umbrella companies must ensure proper tax and NI deductions; where no agency is involved, this responsibility will fall on the employer. This change aims to reinforce accountability and compliance within the labour supply chain.
The Autumn Budget presents a mix of increased obligations and targeted reliefs, especially for smaller businesses and those in specific sectors. If you are unsure about how these changes are going to affect your business, please get in touch. Our team are happy to help you.
