There had been lots of speculation before the budget was announced about what was going to change and how it was going to affect us all. And now that the wait is over you may be feeling a little concerned about how the changes may affect you as a business owner.
We’ve put this blog together which will hopefully give you some clarity, but if you’re still wanting to chat it through with us then please book a call.
Income Tax
Income Tax and National Insurance thresholds will remain the same for employees until 2028 when they will be increased again inline with inflation. The rates at which employees are taxed will also remain unchanged.
Corporation Tax
Alongside the budget the government published a roadmap for Corporation tax. This roadmap sets out the changes that will be made during the course of the current labour parliament. The commitments set out in the roadmap include:
Capping the rate of Corporation Tax at 25%
Retaining the small profits rate and marginal relief at current thresholds and rates
Maintaining world leading capital allowances system, including permanent full expensing, the £1 million annual investment allowance and Structures and Buildings Allowance
Working collaboratively with businesses on simplifying and improving HMRC’s user experience
Supporting R&D intensive businesses
National Insurance and Employment allowance
Despite the government capping the thresholds and rates for employees’ National Insurance, they have increased the liability for employers from 13.8% to 15% The threshold at which this is enforced has also been reduced from £9,100 to £5,000 from April 2025.
Employment Allowance will increase from £5,000 to £10,500 to support smaller businesses.
VAT Thresholds
No changes were announced to the current VAT threshold of £90,000 for VAT registration and £88,000 for VAT de-registration.
Making Tax Digital (MTD)
MTD for Income Tax for Sole Traders and Landlords with an income over £50,000 is set to roll out in April 2026 and April 2027 for those with an income of £30,000 and over. The government has extended this to those with an income of over £20,000 by the end of this Parliament. However, no date has been agreed.
Small Business Rates Relief
The government intends to permanently lower business rates for retail, hospitality, and leisure properties from 2026-27.
Inheritance Tax
Inheritance tax nil rates bands are already set until 5th April 2028 and the government intends to further extend this for a further 2 years.
The rates for:
Nil rate band will continue at £325,000
Residence nil rate will continue at £175,000
Residence nil rate band taper will continue to start at £2 Million.
Qualifying estates can continue to pass on up to £500,000 and the surviving spouse or civil partner can continue to pass on up to £1 million without inheritance tax liability being applicable. Significant restrictions on agricultural and business property relief are proposed from April 2026. Unused pension funds and death benefits will be included in estates from April 2027.
Capital Gains Tax
With immediate effect Capital Gain Tax will increase from 10% to 18% and the higher rate from 20% to 24% The rate for trustees and personal representatives will rise from 20% to 24% whereas the existing rates of 18% and 24% for residential property will remain the same.
From 6 April 2025, the rate for Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14%. This will further rise from 14% to 18% on 6 April 2026. The Investors’ Relief lifetime limit will be reduced from £10m to £1m for qualifying disposals made on or after 30 October 2024.
Capital Allowances
The Capital Allowance Regime will retain its key features such as:
full expensing with a 100% first year allowance for qualifying plant and machinery
50% first allowance for special rate machinery
Annual Investment Allowance
This allowance will continue to offer 100% first year relief for plant and machinery investments of up to £1m for all businesses including unincorporated ones.
Additionally, the Structures and Building Allowance will provide relief for capital expenditures on the purchase, renovation and construction of non-residential structures and buildings.
Furnished Holiday Lets (FHL)
From April 2025 there will no longer be a tax advantage to landlords who let out short-term furnished holiday lets.
Stamp Duty
The higher rates for Additional Dwellings surcharge on Stamp Duty Land Tax will be increased from 3% to 5% as of 31st October 2024.
Road Tax for Vans and Cars
Changes to Vehicle Road tax will come into play from 1st April 2025 as follows:
zero emission cars will pay the lowest first year rate at £10 until 2029 to 2030
rates for cars emitting 1g/km to 50g/km of CO2, including hybrid vehicles, will increase to £110
rates for cars emitting 51g/km to 75g/km of CO2, including hybrid vehicles, will increase to £130
all other rates for cars emitting 76g/km of CO2 and above will double from their current level.
Company Car Tax
The way in which the tax on a company car is calculated will be changed from:
Zero Emission - will increase by 2% in 2028-29 and again by a further 2% 2029-30
1g-50g CO2 per km and are also capable of operating on electrical power will rise to 18% in 2028-29 and by a further 1% in 2029-30.
All other emission bands will increase by 1% per year in 2028-29 and again in 2029-30
Changes to the taxation of non-UK domiciled individuals
The government will introduce legislation in Finance Bill 2024-25, abolishing the remittance basis of taxation for non-UK domiciled individuals and replacing it with a residence-based regime, which will take effect from 6 April 2025.
Individuals who opt into the regime will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence. From 6 April 2025, the government will introduce a new residence-based system for Inheritance Tax.
I hope we’ve managed to give you a breakdown of the main points in a way which is understandable. We know how confusing it can sound when you read the information on the government website and want to simplify it for you as much as possible.
This is a basic guide prepared by Pinnacle Advisory Services® for their clients. It should not be used as a definitive guide since individual circumstances may vary. Specific advice should be obtained where necessary.
If you think you’ll be affected by any of the points mentioned in this blog and would like to talk it through, then please do book a call.
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