Businesses all over the country have been waiting to see what changes would affect them when the Chancellor, Rachel Reeves, stood up in the House of Commons to announce the November 2024 budget. At AMR Bookkeeping Solutions, we were obviously paying close attention to anything which was likely to impact bookkeeping and payroll. We’ve put together some pointers that business owners need to be aware of.
Employer National Insurance Contributions (NICs)
You’d need to have been living on a desert island to miss the press coverage that this rise has generated, and it could have major implications for small businesses.
From April 2025, the rate of employers’ NICs will increase from 13.8% to 15%. The threshold at which employers have to pay NICs (which is known as the secondary threshold) will be reduced from £9100 per year to £5000 per year. This will make it less than the lower earnings threshold, at which an employee has to pay employee NICs, and will be raised to £125 per week. Inevitably this will have an impact on the costs of taking on staff. In a nod to smaller businesses, however, Employment Allowance will be increased from £5000 to £10,500, and the eligibility threshold, which was set at £100,000, is being removed altogether.
Changes to National Living and National Minimum wage
Small businesses particularly will need to check budgets and cash flow to allow for these increases:
- The National Living Wage will increase to £12.21 from 1 April 2025 for employees aged 25 or above
- The National Minimum Wage for employees aged 18-20 will increase to £10.00
- The National Minimum Wage for employees aged 16-17 will increase to £7.55
- The National Minimum Wage rate for apprentices will increase to £7.55
The expansion of Making Tax Digital (MTD) for Income Tax
Sole traders and landlords should be aware that they will be included in a phased roll-out which will be taking place for MTD for Income Tax self-assessment. For those with incomes over £50,000 this will apply from April 2026, and for those with incomes over £30,000 from April 2027. It’s highly likely that this threshold will fall further in subsequent years.
Increase in Capital Gains Tax (CGT)
The lower rate of CGT has increased from 10% to 18%, and the higher rate from 20% to 24%, and this applies to disposals made on or after 30 October 2024. If you were intending to sell any business assets, you’ll need to bear in mind that the rates for Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will rise to 14% from April 2025 and will be brought in line with the main CGT lower rate of 18%.
An increase in late tax payment interest rates
The government is clamping down on late payments of tax liabilities by increasing the interest rates for late payments by 1.5% from April 2025. This brings it into line with the Bank of England base rate plus 4%, an increase of the base rate plus 2.5%.
It’s therefore even more important this year to file your tax return on time and meet your tax liabilities by the deadline. If you are managing to run a successful business but find it hard to carve out time to do the bookkeeping, why not let AMR Bookkeeping Solutions take the weight off your shoulders and leave you free to concentrate on what you do best? If you need help with any aspect of bookkeeping or payroll, our friendly and professional team is here to help. Complete our contact us form or call 01892 559480.
