BiKBBI CEO, Damian Walters, reacts to The Chancellor’s Autumn 2024 Budget Statement:
“Yesterday Labour’s first budget since 2010 was announced, billed as a Budget to rebuild Britain. Following much media speculation, Rachel Reeve’s budget promised greater investment in innovation but the rumoured changes to tax and the minimum wage were cemented, leaving many UK businesses worried.
Labour claim to be supporting the working people with this tax raising budget but it’s hard to see how the Government’s approach supports the 5.5 million hard-working SMEs operating in the UK. This budget could potentially stifle growth and hinder small businesses as they try to survive in an already challenging climate.
Increasing the rate of National Insurance for employers from 13.8% to 15%, as well as a significant reduction in the threshold, almost halved, for when employers start paying the tax from £9,100 to £5,000, will be a double blow to the small businesses that will be dragged into paying this tax for the first time.
The employment allowance increase from £5,000 to £10,500 will only benefit 865,000 SMEs which is not enough. SMEs generate 53% of turnover in the private sector – we should be nurturing them and helping small businesses to thrive in order to grow the economy.
After years of uncertainty, the new Government had the opportunity to do much more to support SMEs, which account for 99.9% businesses operating in the UK.
Our focus now, as the only institute representing thousands of micro-SMEs, small businesses and sole traders operating in the kitchen, bedroom and bathroom installation sector, is to help our registered businesses digest and react to the changes.”
What does the autumn budget 2024 mean for KBB installation businesses and what should you be aware of?
The fuel duty freeze has been extended
First up, the government confirmed fuel duty would remain frozen for 2025-26, with the current 5p per litre cut maintained until March 2026.
This means fuel prices at the pump will stay steady, which is good news for businesses as well as consumers, particularly tradespeople running small businesses that rely on vehicles to work. Albeit will bring little comfort to those EV owners, persuaded to ‘ Go Green’, as vehicle road tax will be introduced from April 2025
Changes to National Insurance contributions for employers
Whilst The Chancellor has kept her promise not to increase National Insurance for employees, employers will see their NI contributions rise by 1.2 percentage points, to 15% from April 2025. She will also lower the threshold at which companies start to pay on an employee’s salary, from £9,000 to £5,000. There are concerns this will put more pressure on already stretched small businesses, increasing operating costs further and could lead to a reduction in hiring and smaller pay rises for employees.
But there is some positive news for SMEs in this section of the budget, with a rise in the employment allowance from £5,000 to £10,500, meaning that more than 800,000 small businesses will be exempt from paying NI and over one million will pay the same or less than they did previously.
In summary, if you don’t employ staff this taxation increase won’t impact you but, if you do, you should check with your accountant.
For the self-employed, the rates of Class 4 self-employed NICs will remain unchanged from the current rate of 6% and 2%.
Rise in National Minimum Wage
Part of the Government’s plan to put more money into the pockets of hard-working people is a rise in the National Minimum Wage to £12.21 for adults over 21 from April 2025 – a 6.7% increase. For 18-20-year-olds, the minimum wage will go from £8.60 to £10, with apprentice wages rising from £6.40 to £7.55.
Again, this move will put more pressure on small businesses looking to grow and could also be detrimental to any progress on closing the skills gap in the KBB sector, as this move applies more fiscal pressure to installation businesses considering taking on an apprentice.
Corporation Tax rates
The Government has confirmed that the rates of Corporation Tax will remain unchanged at 25% for companies with profits over £250,000. The 19% small profits rate will be payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.
Tax on dividends
Currently, the first £500 of dividends is chargeable to tax at 0% (the Dividend Allowance). This £500 is retained for 2025/26. In 2025/2026, dividends received above the allowance will be taxed at 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, 39.35% for additional rate taxpayers.
Taxable benefits for company cars and company vans
The rates of tax for company cars are amended for 2025/26 with the charge for zero emission cars rising from 2% to 3%. The charge for other cars increases by 1% and the maximum benefit of 37% remains.
The government has confirmed increases to the benefit in kind rates for company cars for tax years up to and including 2029/30. The government will uprate the car fuel benefit charge by CPI from 6 April 2025.
The government will uprate the Van Benefit Charge and the Van Fuel Benefit Charges by CPI from 6 April 2025.
Capital allowances
The Full Expensing rules for companies allow a 100% write-off on qualifying expenditure on most plant and machinery (excluding cars) as long as it is new and unused. Similar rules apply to integral features and long-life assets at a rate of 50%. The government will explore extending Full Expensing to assets bought for leasing or hiring when fiscal conditions allow.
Business Asset Disposal Relief
The rate applying for individuals claiming Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14% for disposals made on or after 6 April 2025. The rate will increase again to 18% for disposals made on or after 6 April 2026.
In addition, the lifetime limit for Investors’ Relief will be reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. This limit takes into account any prior qualifying gains where the relief was claimed.
The VAT Registration threshold
The current VAT Registration threshold remains at £90,000 and the deregistration threshold at £88,000.
Ongoing commitment to making tax digital and increasing late payment interest rates
The government is committed to delivering Making Tax Digital for Income Tax Self-Assessment, which is supposed to start in April 2026. The government will expand the rollout of the programme to those with incomes over £20,000 by the end of this Parliament and will set out the precise timing for this at a future fiscal event.
Other changes include increasing the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5%.
If you haven’t already started to move towards digitalising your accounting and tax processes, now might be a suitable time to start thinking about it in order to be prepared when the changes come in to force.
The immediate response to the Autumn Budget 2024 seems to be one of doubt, disappointment and continued uncertainty. There is no doubt, however, that this budget will impact individuals and businesses across the UK and therefore we would encourage BiKBBI registered businesses and the wider KBB installation sector to seek professional financial advice if unsure of the impact the budget poses for them.
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