We’re just reporting the facts, we’ll leave it up to you to decide whether the Chancellor’s plans go far enough.
National Insurance Contributions
As expected, there’ll be no change to employee National Insurance Contributions (NICs), but employers will see their NICs increase by 1.2 percentage points – from April 2025 it will increase from 13.8% to 15.0%.
The secondary threshold (the point at which employers start paying NICs on employee’s earnings) has been cut from £9,100 to £5,000.
To try and lessen the impact on smaller businesses, the Employment Allowance will increase from £5,000 to £10,500. This will mean an estimated 865,000 employers will pay no NICs next year. It’s also estimated that a further 1 million employers will pay the same as or less than previously.
Business rates
Business rates are taxes on property used for business purposes, such as offices, shops, pubs, and warehouses. Business rates are calculated by using a multiplier. The rateable value of your business property is multiplied by this number to give you your final bill. If the rateable value of your property is below £51,000, your bill will be calculated using the small business multiplier. This mutliplier has been frozen.
The Retail, Hospitality and Leisure business rates relief scheme, which offers a 75% relief on business rates, will end in April 2025. It will be replaced by a discount of 40%, up to a discount of £110,000.
The current 75% discount to business rates – due to expire in April 2025 – will be replaced by a discount of 40% – up to a maximum discount of £110k.
Corporation Tax
No change to corporation tax was announced.
If your company has profits of £50,000 or less, you’ll pay a small profits rate (SPR) of 19%. Any profits between £50,000 and £250,000 will be charged at a higher rate of 25%. Marginal relief is offered to make this an incremental increase to soften the impact.
Full capital expensing for businesses will stay in place. This means that every £1 a company invests in IT, plant or machinery can be deducted in full from taxable profits.
Income Tax
There will be no extension of the freeze in income tax thresholds beyond the decisions of the previous government. This means the current rates will be frozen until 2028
Capital gains tax
If you sell assets at a profit, such as a second home or investments, including shares, you’ll be charged capital gains tax on the money you make.
The lower rate of Capital Gains Tax will rise from 10% to 18%, and the higher rate from 20% to 24%.
The rates on residential property will remain at 18% and 24%.
Asset Disposal Relief will stay at 10% on all qualifying assets until April 2025, when it will increase to 14%. From April 2026 it will increase to 18%. The lifetime limit asset disposal will stay at £1 million.
Wages
The national living wage – the minimum amount that can be paid to workers who are 21 and over – will rise by 6.7% from April 2025, when the following will apply:
- £12.21 per hour for employees aged 21 and over
- £10.00 per hour for employees aged 18-20
- £7.55 per hour for employees aged under 18
- £7.55 per hour for apprentices
Please feel free to contact us on 0161 8044333 with any questions you may have.