Understanding the Impact of the Autumn Budget 2024 on SMBs: A Detailed Guide
The Autumn Budget 2024 has introduced several significant changes that will impact small and medium-sized businesses (SMBs) across various sectors. As SMBs gear up to navigate these changes, BM Connect offers expert services in payroll solutions, management reporting, and accounts preparation to ensure businesses remain efficient and compliant.
Detailed Breakdown of Key Announcements:
- Making Tax Digital (MTD) for Income Tax:
- Implementation Date: The government confirmed that MTD for Income Tax will be mandatory from April 2026 for taxpayers with a gross income over £50,000 from self-employment and/or property. This threshold will extend to those with income above £30,000 in 2027, and later to £20,000 by 2029.
- Impact on SMBs: This means that SMBs will need to maintain digital records and submit updates to HMRC using compatible software, a move that aims to make tax administration more efficient but will require SMBs to adapt their processes.
Mariske Byrnes, MD of BM Connect, comments: “The transition to Making Tax Digital represents a major shift in tax reporting. At BM Connect, we’re ready to support businesses with advanced software solutions that simplify compliance and enhance overall tax management.”
- Tax Changes:
- Capital Gains Tax (CGT): Immediate increase in the lower rate of CGT from 10% to 18% and the higher rate from 20% to 24%. Rates for Business Asset Disposal Relief and Investors’ Relief will rise gradually until they match the main rates by April 2026.
- Corporation Tax: The rate will remain capped at 25% throughout the current Parliament, providing predictability for business investment and financial planning.
Mariske says: “Navigating these tax changes requires a proactive approach. Our team at BM Connect, together with our group company Beavis Morgan, provides comprehensive tax planning and strategy to ensure that SMBs not only comply with new tax rates but also optimise their financial outcomes.”
- Support for Retail, Hospitality, and Leisure:
- National Minimum Wage Adjustments: The sector will face another increase in costs with changes to all levels of the National Minimum Wage. This will significantly impact operational expenses.
- Furnished Holiday Letting Regime Changes: From April 2025, the current tax benefits for furnished holiday lettings will be removed, increasing the tax burden on businesses operating holiday lets.
- Business Rates Relief: From 2026-27, properties in these sectors will benefit from permanently lower business rates multipliers, although the specifics are yet to be detailed. For the financial year 2025-26, these businesses will receive 40% relief on their bills, up to a £110,000 cash cap, reduced from the current 75% relief.
“The hospitality and leisure sectors are experiencing pivotal changes. At BM Connect, we provide targeted financial strategies that help businesses adapt to increased wages and shifting tax landscapes, ensuring sustainable growth.”
- Payroll Changes:
- Employer National Insurance Contributions (NICs): Employer National Insurance Contributions (NICs): From April 2025 the rate for employers’ NICs will increase from 13.8% to 15% and the secondary threshold from which employers’ NICs applies reduces from £9100 to £5000 per annum. Starting April 2028, NIC thresholds will be indexed with inflation.
- National Living and Minimum Wages: Increases across various age brackets to take effect from April 2025, impacting payroll calculations and labour costs. Notably the 18-20 year old rate increases by 16.3% and the rate for workers aged 21 and over increases by 6.7%.
- Integration of Benefits in Kind into Payroll Software: Effective April 2026, the reporting of all benefits in kind will need to be integrated into payroll software, mandating the collection of Tax and Class 1A National Insurance under PAYE for all benefits, which streamlines the payroll process and requires accurate benefit valuations each pay period.
Commenting, Alex Nicholl, BM Connect Payroll Director, says: “The upcoming changes in payroll regulations, including the rise in Employer NICs to 15%, the indexing of NIC thresholds with inflation, and the increase in National Living and Minimum Wages, represent significant shifts for business payroll systems. Additionally, the integration of Benefits in Kind into payroll software by April 2026 will require businesses to ensure their payroll systems are not only compliant but also capable of handling these complexities in real-time. At BM Connect, we guide our clients through these transitions with our advanced payroll solutions. By providing expertise and state-of-the-art software, we help businesses manage these changes efficiently, ensuring accuracy in payroll processing and compliance with the new requirements.”
- E-invoicing:
- Consultation and Potential Mandate: The government plans to consult on e-invoicing standards in early 2025, with a view to encouraging or possibly mandating its adoption. This move is intended to streamline invoicing processes and ensure faster payment cycles for SMBs.
Mariske Byrnes adds: “The potential move towards mandated e-invoicing could revolutionise how transactions are processed. We’re here to help businesses prepare for this change, enhancing their invoicing systems to boost efficiency and reduce payment delays.”
How BM Connect Supports SMBs in Light of These Changes:
Payroll Solutions: Given the changes to tax and payroll regulations, BM Connect’s payroll services ensure that SMBs are compliant, optimising payroll processing to accommodate new tax rates and thresholds.
Management Reporting: Effective management reporting becomes pivotal as financial landscapes shift. BM Connect offers cloud-based solutions that provide real-time financial insights, helping SMBs navigate the economic changes effectively.
Accounts Preparation: With changes in tax rates, particularly CGT, BM Connect aids SMBs in aligning their accounting practices with new fiscal regulations, ensuring they can maximise benefits from various allowances and tax reliefs.
Digital Transformation Support: As MTD and potential e-invoicing requirements come into play, BM Connect helps SMBs digitise their tax and accounting processes, ensuring seamless compliance and enhanced operational efficiency.
Conclusion
The Autumn Budget 2024 sets a complex stage for SMBs, presenting both challenges and opportunities. BM Connect is dedicated to assisting businesses through these changes with comprehensive services designed to ensure seamless adaptation and sustained growth.
For more insights and personalised consultation on how these changes will specifically affect your business, visit our detailed Budget 2024 analysis provided by the Beavis Morgan group, of which we are a member company, or contact us directly for a tailored approach.
Further reading:
Autumn Budget 2024: Impact on the Hospitality, Retail, and Leisure Sector
Autumn Budget 2024: Impact on HR and Strategic Adjustments for Economic Stability
