Andrew Brook
14 Nov 2024
Budget for business growth?
With the General Election being in July many expected that the new Government would have presented its first budget before now but they seemed to want to wait for the traditional Autumn Statement. So what has Rachel Reeves' first 'budget for growth' proposed and how does it impact our clients?
The Key points were as follows:
Increase in National Minimum Wage
Increase in Employers NI.
Employment Allowance increase
Electric Company Cars
Personal tax rates and thresholds frozen
MTD update
Changes to Late Payment Interest Rates
National Minimum Wage
From April 2025 this will be as follows:
Adults (21+) £12.21/hr
18-20 £10.00/hr
Under 18 and Apprentice £7.55/hr
NI
Class 1
Employees' NI unchanged
From April 2025:
The Second Threshold (ST) when Employer's NI is payable will decrease from £9,100 to £5,000 and remain at that level until 2027/28 when it will increase with annual rate of CPI.
The rate of Employers' contribution will increase from 13.8% to 15%.
Employment Allowance
In some good news for employers after the NI increases there is some relief with increased employment allowances. Obviously the impact of this relief depends on the size of your payroll.
From April 2025
The £100,000 threshold for eligibility will be removed (ie the total employers' Class 1 NI liabilities) and
The annual value will increase from £5,000 to £10,500
Company Cars
The 100% First year Allowance for zero emission (fully electric) cars and EV charge points has been extended to 2028/29.
Personal Tax Rates & Thresholds
As expected the Personal Tax Rates and Bands (including the Threshold for Income Tax) have been left unchanged until 2027/8.
MTD
In a phased rollout, Making Tax Digital(MTD) for Income Tax Self-Assessment (ITSA) will apply to sole traders and landlords earning over £50,000 by April 2026, and to those with incomes over £30,000 by April 2027. The rollout will likely expand further to include those earning over £20,000 before the end of this Parliament.
Changes to Late Payment Interest Rates
The Government announced an increase in the late payment interest rate on unpaid tax liabilities by 1.5% from April 2025. Now set at the Bank of England base rate plus 4% (up from the previous base rate plus 2.5%), this move is intended to encourage timely payments and maintain fairness for compliant taxpayers.