The recent Autumn Budget 2024 drew significant attention both before and after its announcement, and with renewed public focus after theBritish farming community staged protests against some of the measures announced.

The Budget, the first from a female Chancellor, RachelReeves, and the first from a Labour government for many years, announced substantial tax reforms (a Labour political staple, reform)  and increased public investment with the aim of overcoming economic challenges and supporting public services (even moreLabour political staple) and attracting business investment. A mighty and noble aim, no doubt.

However, businesses are set to experience considerable increases in the costs of doing business – hence the farmers spending a day shouting in the capital – and despite measures introduced to mitigate some of the anticipated pain and Reeves repeatedly emphasising that reforms are necessary to correct a deficit blamed on the previous government (surprise, surprise).

It will be interesting to see if these measures succeed or not, as opinion across society has been resoundingly negative and critical.

The key takeaways from the Budget include:

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- Employer National Insurance contributions

From April 2025, employer contributions will rise by 1.2% to 15%, with the Treasury estimating that it will raise £25billion by the next election. In response, the Federation of Small Businesses expressed concerns about increased costs to businesses, but welcomed the rise in the Employment Allowance for small businesses to help mitigate (the allowance increasing from £5,000 to £10,500, again from April 2025).

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- Capital Gains Tax

The lower and higher rates will increase from 10% to 18% and 20% to 24%, respectively. These changes could affect businesses selling assets, particularly those planning for retirement orreinvestment.

- Business and Agricultural Property Reliefs

Relief caps changes will affect assets valued over £1 million to a 20% inheritance tax rate, attracting criticism from the farming community and from family-run businesses.

- Minimum Wage Increase
The minimum wage rises by 6.7% to £12.21 per hour. Great for employees, but businesses will face higher wage bills along with associated tax and NI increases. It is these increases that attracted a lot of the criticism – higher wages, tax andNI costs could affect recruitment and dampen future pay rises, especially if inflation fluctuates.

- Public Spending and Investment

The NHS has been given a £22.6 billion increase in its funding and there’s £6.7 billion for education, whilst HS2 has been promised continued funding, with Reeves confirming the route ends in central London (Euston) and not west London (Old Oak Common), a move away from the previous government which left the project’s ultimate destination up in the air.

- Fuel Duty Freeze

Frozen for another year.

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Business Reaction

While some measures, like the Employment Allowance increase, offer relief to small businesses, others have raised concerns. Farming and family business sectors, in particular, are critical of inheritance tax changes. Broader worries persist about the combined pressure of tax hikes, wage increases, and new regulations from the proposed Employment Bill.

Outlook for business

The Budget is a mixed bag. Public services got a great deal, but many business sectors in the economy are critical, for example of inheritance tax changes. Increased costs to doing business (increased NI contributions, for example) will likely not be mitigated by other measures announced (an increase to the Employment Allowance, for example), but only time will tell.

For businesses, a focus on strategic planning to anticipate and manage rising costs should be on the minds of all directors.

Here at Folio, we work with businesses to help them plan ahead, including raising awareness of all available tax reliefs and allowances to mitigate tax burdens, including reliefs such as R&D tax relief. Our specialist team has decades of experience in the field and serves a diverse range of businesses, all engaging in innovation.