The Budget and What It Means For SMEs and Landlords

Following the Budget announcement, Chancellor of the Exchequer Rachel Reeves has defended the decision to raise taxes by the highest amount since 1993, stating that “everything has to be paid for”.

The eagerly anticipated Autumn Budget, Labour’s first for 14 years, has been met with the usual levels of scrutiny, but it remains to be seen what impact some of the announcements might have on the economy in general.

What we do know is that in the short/medium term, the Budget will have a significant impact on SMEs and landlords. Here’s a look at just some of the decisions that could influence you and/or your business.

National minimum wage increase

Reeves said the pay increase was a "significant step" towards achieving Labour’s promise of a "genuine living wage" for workers. But what does this mean exactly?

Well, in April of next year, the minimum wage will increase by 6.7% to £12.21 per hour for people over the age of 21. If you have employees that fall into the 18 to 20-year-old bracket, their hourly rate will leap from £8.60 to £10. Apprentices will receive the biggest increase, going from £6.40 to £7.55 an hour.

There’s news on business rates too, with 40% business rates discount available to businesses occupying eligible retail, hospitality and leisure properties, up to a cash cap of £110,000 per business for one year. The small business multiplier will also be frozen at 49.9p for one year.

National Insurance increase

In a move that is designed to raise £25bn in tax revenues each year, in April 2025, Employers’ national insurance contributions (NICs) will increase from 13.8% to 15%.

It also means that national insurance will be due on any salary starting from £5,000. Previously set at £9,100, the increase to national insurance could have huge cost implications for businesses.

To assist small businesses with the changes to national insurance, employment allowance has also been increased from £5,000 to £10,500.

Landlords

If you are a landlord, then the autumn Budget will certainly impact you.

For example, stamp duty (SDLT) has increased on second homes, which means that from 31^st October 2024, anyone who is in the process of buying a second property will be hit with a 5% SDLT, up 2% from 3%, and something that could directly impact landlords profits.

Changes to capital gains tax had been widely predicted as well and didn’t disappoint. The basic taxpayer's rate increased from 10% to 18%, and for higher-rate taxpayers, from 20% to 24%. These changes have also been introduced immediately and align the CGT rates with those on sales of residential property.

As with every Budget, our advice is to look at everything in far greater detail than what we have managed to cover in this article. What we have presented is merely a snapshot. You can find more landlord specific detail on our dedicated page here.

Remember; if you do run a business, you must be protected correctly. At Towergate, we cater for businesses of all sizes and our unique approach means that whether you’re a large business, SME, sole trader, someone who works from home, or oversee a property empire – we have the experience, advice and policy to match your needs.

Towergate is one of the leading insurance intermediaries in the UK and provides a specialist range of cover including SME liability insurance products.

Our team of dedicated advisers are highly trained and will handle your enquiries confidentially. We offer suitably priced products from a range of carefully selected insurers.

For more information for business insurance, visit our dedicated business insurance page or see our cover for a range of trades.  Alternatively, our Landlord insurance provides cover specifically for renting properties, including loss of rent cover and property portfolios. For more information visit our dedicated landlord insurance page or call us on 0344 892 1664.

About the author

Alison Wild BCom (Hons), FMAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has over 20 years' experience as a residential landlord.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.