Chancellor Rachel Reeves has been quoted as saying: ‘she will make the “necessary choices” for the economy, to bring down NHS waiting lists, the national debt and the cost of living.”
But let’s breakdown some of the aspects it is worth keeping an eye out for as a business owner.
- Corporation Tax: The current government has pledged to cap the main rate of Corporation Tax at 25% for the duration of this Parliament, so significant changes to the headline rate are not expected.
- Business Rates: Further announcements on business rates reform are expected, potentially focusing on enhanced reliefs for small businesses or changes to encourage investment. A national revaluation of property is also due next year, which will affect many businesses’ bills.
- VAT: Speculation exists around potentially lowering the VAT registration threshold from £90,000, which would bring many more small businesses into the VAT system and increase compliance burdens. An increase in the main VAT rate is also possible, though it would be inflationary.
- Employment Costs & National Insurance (NICs): Following a rise in employer’s NICs in the last budget, there may be pressure for the government to offer some relief, possibly through an increased Employment Allowance. However, changes to salary sacrifice schemes, making employer contributions subject to NI, are also a possibility.
- Capital Gains Tax (CGT) and Investment Reliefs: CGT rates were increased in the 2024 Budget, and the annual exempt amount was cut significantly. Further adjustments to CGT or changes to reliefs like Business Asset Disposal Relief (BADR) and Investors’ Relief could impact business owners looking to sell their companies or assets.
- Inheritance Tax (IHT and BPR): The rules around IHT are under scrutiny, with potential tightening of rules around lifetime gifts or changes to Business Property Relief (BPR) and Agricultural Property Relief (APR).
- Digital and AI Initiatives: The government is investing heavily in digital and AI across public services and may announce new incentives or requirements for businesses, such as a move towards mandatory e-invoicing to reduce VAT fraud and error.
The message the government is wanting to push is that they are on the business owner’s side, after a lot being asked of them last time, but confidence is still fragile. So watch this space and Slice will be here to support.