UK Autumn Budget 2024 Review

31 Oct

At Adam Benedict, we recognize the critical importance of the UK Autumn Budget 2024 introduces several impactful measures impacting UK companies across various sectors. Our team of experienced legal professionals are well-equipped to assist you in navigating the implications of these new measures. Here’s a breakdown of key points and their legal implications:

Taxation

Corporation Tax: The main rate remains capped at 25%, aimed to maintain stability. For businesses with smaller profits (up to £50,000), the reduced rate of 19% tax rate continues, while profits between £50,000-£250,000 benefit from marginal relief, allowing for a gradual transition to the higher tax rate of 25%. Arguably, this will promote competitiveness within the SME sector.

Capital Gains Tax (CGT): The CGT rate on residential property gains will be reduced from 28% to 24% from April 2025, boosting the property market. However, stamp duty relief for multiple property buyers is set to end, which may affect property investors.

Investment in Innovation and Green Sectors

Green Industry Funding: The budget allocates £120 million to the Green Industries Growth Accelerator, which will fund offshore wind and carbon capture projects. This aligns with the government’s legal commitments under the UK’s carbon reduction targets.

Creative Sector Incentives: UK-based film and TV productions with budgets under £15 million will enjoy new tax credits, supporting the creative industry and fostering local talent. Additionally, independent theatres, orchestras, and galleries will benefit from permanent tax reliefs.

Employer National Insurance Contributions (NICs)

The threshold for employer NICs contributions will be frozen until April 2028. This effectively means that businesses will not see an increase in the NIC threshold, potentially raising costs over time due to inflation and wage growth while keeping the contributions static. However, the Employment Allowance remains in place and will exempt 40% of small businesses from paying any employer NICs, offering relief to smaller firms. Larger companies, particularly those with significant payrolls, may need to adjust their budgets to manage these fixed costs. We expect that this may result in gradually higher expenses as wages rise, potentially leading to redundancies, wage adjustments or hiring freezes just to name a few. This approach allows small businesses to retain financial flexibility while asking larger companies to contribute more consistently to the NIC system over time.

In light of the frozen NIC threshold, our employment law team at Adam Benedict are prepared to advise on the implications for employers. We can assist with payroll management strategies, compliance with NIC obligations, and navigating potential employment changes stemming from budget-related cost pressures.

Property and Investment Support

Full Expensing for Capital Investment: Full expensing on capital investments, including leased assets, will continue. This provision enables companies to deduct the cost of eligible investments in new technology and machinery, stimulating reinvestment and innovation across various sectors.

Support for SMEs and Growth Sectors

VAT Threshold Increase: The VAT registration threshold has been raised from £85,000 to £90,000. This aims to reduce the administrative burden on small businesses and improve cash flow for companies nearing the VAT limit.

Regional Growth Funding: Additional funding through the Long-Term Plan for Towns will direct hundreds of millions to priority regions, with devolution deals extending powers to local leaders to drive regional development. The North-East, Suffolk, and Norfolk are among areas receiving devolution packages that include funding for local business growth initiatives.

Legal and Policy Reforms

Abolition of Non-Dom Tax Status: From April 2025, non-domiciled residents will lose their tax exemptions on global income after four years in the UK, which impacts high-net-worth international workers and could influence staffing and tax planning strategies for businesses with international talent.

Reforms in Energy Profits Levy: The Energy Profits Levy on oil and gas companies will extend to March 2029. This aims to ensure that companies benefitting from high energy prices contribute fairly, with proceeds supporting public finances and energy sector stability.

The Autumn Budget 2024, therefore, focuses on fostering growth by supporting small and medium enterprises, boosting regional development, and ensuring sustainable investments, while implementing tax reforms that align with the UK’s economic resilience goals. This comprehensive approach provides businesses with clarity on tax and investment incentives, along with targeted support to adapt to regulatory changes and seize growth opportunities in evolving sectors.

At Adam Benedict, we are committed to helping businesses leverage the opportunities presented by the Autumn Budget 2024. Our multi-disciplinary approach ensures that clients receive expert legal guidance tailored to their specific needs, empowering them to thrive in an evolving economic landscape. Contact us today to learn how we can assist you in navigating these changes and achieving your business objectives.

Source: gov.uk