Today, Chancellor Rachel Reeves delivered the first Labour budget in nearly fifteen years, a significant shift aimed at addressing both economic challenges and growth opportunities across the UK. The new budget was anticipated to include measures for dealing with a reported £22 billion deficit left by the previous Conservative government. But what does this autumn budget mean specifically for small and medium-sized enterprises (SMEs)? Let’s dive into the main takeaways and their implications for your business.
Autumn Budget Highlights for SMEs
1. Small Business Rates Multiplier Freeze
The small business multiplier in England is set to be frozen, offering stability for business owners facing rate hikes. This move is part of a larger support package aimed at retail, hospitality, and leisure (RHL) properties, which includes a 40% rate relief on bills, capped at £110,000. Freezing the multiplier aims to reduce the financial pressure on SMEs across the high street.
2. Boosts in Technology, Green Business, and Automotive Sectors
The government has committed substantial funds to support growth in key sectors, announcing a 10-year infrastructure strategy focused on modernising the UK’s tech, green energy, and life sciences industries. This includes £975 million allocated to aerospace over five years, £2 billion to the automotive sector, and up to £520 million for a new Life Sciences Innovative Manufacturing Fund. For SMEs, this marks potential new opportunities in these high-growth sectors.
3. Increased National Insurance Contributions for Employers
While individual tax rates, including National Insurance, remain stable as per Labour’s pre-election pledges, changes for employers may impact payroll budgets. Beginning April 6, 2025, employers will need to pay National Insurance on employees earning over £5,000, down from the previous £9,100 threshold. However, to support SMEs, the government has raised the Employment Allowance from £5,000 to £10,500, which will exempt many small employers from National Insurance contributions next year.
4. Adjustments to Capital Gains Tax
Capital Gains Tax (CGT) rates will see a rise, with the lower rate moving from 10% to 18% and the higher rate from 20% to 24%. For business owners using Business Asset Disposal Relief or Investors’ Relief, rates will gradually increase to 14% by 2025 and align with the main rate by 2026. This phased approach allows owners to adjust to the changes, supporting a fair contribution from asset owners while keeping the UK competitive internationally.
5. Investment in Technology Infrastructure
The budget includes initiatives to modernise HMRC’s IT systems, aiming to streamline taxpayer interactions with the tax system. This modernised approach has the potential to significantly ease tax management for SMEs, especially as automation tools like AI become more accessible, improving administrative efficiency for small businesses.
6. Business Rates Reform for Small Businesses
RHL properties will benefit from 40% rate relief, along with a freeze on the small business multiplier in England. This decision is part of the government’s broader commitment to supporting small businesses and the high street by providing relief against inflationary rate increases.
Providing Long-Term Stability for Businesses
With a promise to hold one major fiscal event annually, the government aims to foster stability and predictability for both families and businesses. The Corporate Tax Roadmap solidifies this approach by capping the Corporation Tax rate at 25% for the duration of Parliament, ensuring the UK maintains one of the lowest rates in the G7. For small businesses, these measures present a mixed impact, balancing tax and contribution increases with incentives and relief designed to help businesses manage costs in the short and long term.
How Grosvenor House Can Support Your Business Growth Amid Autumn Budget Changes
As SMEs adjust to these new policies, having a reliable partner can make all the difference. At Grosvenor House, we specialise in cost-effective solutions that help businesses thrive without needing to invest in full-time office space. Our virtual office services provide flexible meeting room hire, call handling, and professional business addresses—allowing you to maintain a high level of professionalism while keeping overheads manageable.
Our experienced team is here to help SMEs navigate the budget’s implications and find cost-effective strategies to support growth. Contact Grosvenor House today to discover how our services can streamline operations and provide the professional image your business needs in an ever-evolving economic landscape.