Expert Eye: Simon Shaw of Duncan & Toplis looks at what the Budget might mean for local businesses

Following on from last week’s Budget, Simon Shaw of Duncan & Toplis looks at what this might mean for local businesses.

The Autumn Budget is certainly not all good news.

The biggest impact on businesses will be the combined 6.7% increase in National Living Wage at the same time as employers national insurance increases from 13.8% to 15%.

There is also the third measure which decreases the point at which employers start paying national insurance from the current £9,100 to £5,000.

The combination of these changes means an increased cost for businesses of just over £2,600 per employee paid the National Living Wage. We will have to wait and see how businesses budget for this increase either through reducing other costs or increased prices for their goods or services. There will certainly be many business owners looking very closely at what this means for them ahead of the changes in April.

An unexpected change was the increase in Employment Allowance from the current £5,000 to £10,500 per year. This allowance, which employers set against the amount of employers national insurance they pay, will offset some of the increase for the smallest businesses.

There are also increases in the National Minimum Wage for those aged under 21 with increases ranging from 16% to 18%.

Businesses will also need to consider what effect these increases might have on other employees already paid more than the minimum wage looking for similar increases.

Certain sectors will be relieved to see measures introduced to try and limit the increases in their costs, including reduction in fuel duty and continued discounts to business rates for retail and hospitality businesses

Another focus in the Budget was Capital Gains Tax. Although we didn’t see the very large increases that some had expected, the standard rate increased from 10% to 18% immediately, with an increase in the higher rate from 20% to 24%. These rates remove the distinction between the rates paid on the disposal of residential property.

Business Asset Disposal relief was kept for qualifying business gains, but the rate will increase from the current 10% to 14% from April 2025 and 18% from 2026. Although it is welcomed that the relief remains, the lifetime limit this relief applies to was reduced from the current £10 million to £1 million. These changes will certainly increase the tax costs for many business sales in the future.

The Budget also confirmed the wider roll out of Making Tax Digital for businesses starting from April 2026. This will see businesses having to make quarterly tax submissions to HM Revenue & Customs similar to those already made for VAT. The long-term plan is for this to apply to all businesses with incomes over £20,000. These changes will require more business owners and self-employed to look at how they record their transactions to ensure they are ready to meet these new requirements.

Overall the changes made in the budget will impact every business who will need to re-forecast their plans for 2025 to ensure they factor in these increased costs and more importantly what this means for pricing and growth plans.