The impact of Autumn Budget 2024 on limited companies

The long wait is finally over. Rachel Reeves delivered her first Budget yesterday (30th October), following months of briefings in the press.

Alongside a major rise in Employers NI, there were significant changes to CGT, together with a raft of other tax-raising measures.

Here, we outline the main measures announced in the Autumn Budget, with a focus on changes that affect small limited companies in particular.

Major hike in Employers’ National Insurance

From April 2025, the Employers NI rate will increase from 13.8% to 15%.

The secondary threshold at which employers start paying NI will be cut from £9,100 to £5,000.

To protect smaller firms, the Employment Allowance (EA) will rise significantly—from £5,000 to £10,500. This will shield many small companies from the NI rise, although one-man bands (and various others) aren’t eligible to claim.

Changes to Capital Gains Tax

The basic and higher rates of CGT rise from 10% to 18% and 20% to 24% respectively. These changes are effective immediately.

CGT on residential property disposals remains at 18% (basic) and 24% (higher).

Business Asset Disposal Relief

The lifetime disposal limit (to benefit from BADR) remains £1m.

The BADR rate will increase from 10% currently to 14% in April 2025 and 18% in April 2026.

No changes to Corporation Tax, Dividend Tax, IR35, Employees’ NI or Income Tax

Despite the hikes in Employers NI and CGT, company directors will be pleased to find out that the Chancellor made no changes to many core taxes.

Corporation and dividend taxes have both increased in recent years. Many company directors would find another rise difficult to absorb.

Income tax and NI will be ‘unfrozen’ from 2028 onwards, when the tax bands will rise by inflation once again.

Other business announced in the Budget

• The Annual Investment Allowance (AIA) remains in place, with a £1m cap.
• From April 2026, significant changes will be made to business and agricultural property relief. IHT will apply at an effective rate of 20% rather than a nil rate—a major blow to family farmers.
• The National Minimum Wage (NMW) will increase to £12.21 per hour from April 2025, a 6.7% increase.
  
• The small business rates multiplier is frozen at 49.9p. The standard multiplier rises to 55.5p.

Other non-business measures announced in the Budget

• As planned, VAT on private school fees will go ahead from January 2025.
• The non-dom tax regime will be abolished.
• Stamp Duty on second homes: From 31 October 2024, the higher rate for additional dwellings will increase from 3% to 5%.
• The Inheritance Tax (IHT) threshold will remain frozen at £325,000 until 2030.
• Funds in pension pots will be subject to Inheritance Tax from 2027.

You can access the full list of Budget measures here.