Rachel Reeves handed down the Labour Government’s first budget on 30 October 2024. Here is a summary of the main provisions relevant to employers and businesses.

Employment

• Employer’s National Insurance to rise to 15% (from 13.8%) from 6 April 2025.
•  The level at which businesses start paying NI on each employee’s salary (the ‘secondary threshold) to reduce from £9,100 a year to £5,000
• The Employment Allowance will be increased to £10,500 (from £5,000) and the current £100,000 cap will be removed, so it is extended to all eligible employers.
• Capital Gains Tax (CGT)
  • the lower rate increases to 18% (from 10%) and the higher rate to 24% (from 20%)
  • CGT rates for Business Asset Disposal Relief and Investors’ Relief will rise gradually to 14% from 6 April 2025 and match the main lower rate of 18% from 6 April 2026
• To help drive the transition to electric vehicles (EVs) the government is strengthening incentives to purchase EVs by widening the differentials in Vehicle Excise Duty First Year Rates between EVs and hybrids or internal combustion engine cars. The government is also maintaining EV incentives in the Company Car Tax regime and extending 100% First Year Allowances for zero emission cars and EV charge points for a further year.

Other tax related changes

• Fuel duty is frozen, and the temporary 5p cut extended for a further year
• Income tax and National Insurance contributions thresholds no longer frozen, from April 2028, these personal tax thresholds will be uprated in line with inflation.
• Stamp Duty Land Tax (SDLT) higher rate for additional dwellings on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property increases to 5% (from 3%) from 31 October 2024
• Energy Profits Levy (EPL) increased to 38% (from 35%), the 29% investment allowance will be removed and the levy extended until 31 March 2030.
• 100% first-year allowances in the EPL remain and the government will consult in early 2025 on how the oil and gas tax regime should respond to price shocks once the EPL ends in 2030.
• VAT on private school fees will be chargeable from 30 October 2024 in relation to school terms starting on or after 1 January 2025
• business rates charitable relief in England is removed  
• The concept of non-domicile residents to be abolished from April 2025
• Tax avoidance including by umbrella companies to be targeted
• Alcohol duty on draught products reduced from Feb 2025 by 1p per average strength pint.
• Alcohol duty on non-draught products will increase in line with Retail Price Index (RPI) inflation
• Mandatory duty stamps for spirits removed, with increased investment in the Spirit Drinks Verification Scheme, which allows producers to verify the geographic origin of their products
• Corporation Tax capped at 25%, the lowest in the G7, for the duration of the Parliament.

Other items relating to businesses

• permanently lower business rates multipliers for retail, hospitality and leisure (RHL) properties from 2026-27
• £1.9 billion of support to small businesses and the high street in 2025-26 by freezing the small business multiplier and providing 40% relief on bills for RHL properties, up to a £110,000 cash cap.