The Budget 2024: How it might impact your financial planning

The recent budget has introduced several changes that could have significant implications for small businesses and individual finances in the UK.?

For many business owners, these new measures may feel like a daunting challenge or even a financial setback.?

From adjustments to national insurance contributions to shifts in business rates relief and inheritance tax, the budget brings both opportunities and potential hurdles.

Understanding these changes is essential for anyone navigating the complexities of managing a small business or personal investments.?

In this article, we break down the key updates and consider how they might impact your future financial planning and business operations.

Key Changes to Note:

Employers’ National Insurance:?

• Set to be 15%, with a starting salary at ￡5,000 and an Employment Allowance of ￡10,500 coming in April 2025.
• As a small business grows, you’ll likely mix salary and dividends for pay. Recently, it’s been more favourable to draw salary, especially for higher earners and businesses with multiple director-employees.
• If you qualify for the Employment Allowance, your national insurance costs on salary should stay the same or drop. For example, a higher-paid owner-director won't pay national insurance on salaries up to ￡75,000.
• However, sole shareholder-directors who don’t qualify for this allowance might see their national insurance costs increase significantly on even modest salaries.

Business Rates Increase:?

• For sectors like retail and hospitality, the relief on business rates will drop from 75% to 40% in April 2025. This change could impact your expenses, so it might be time to revisit your budget.

Income Tax Thresholds:?

• Look for an increase starting in April 2028, which may provide some relief, though the real value will still be lower than when these thresholds were initially set.

Stamp Duty on Second Homes:?

• Starting tomorrow, this surcharge will rise from 2% to 5%. This increase could deter investments in buy-to-let or vacation properties, which is important to consider if you're looking to invest.

Capital Gains Tax Changes:?

• Expect increases in capital gains tax for various assets, aligning them with residential property rates. The rate for selling your business will also rise, which is something to keep in mind if you plan on selling down the line.

Inheritance Tax Adjustments:?

• Changes related to pension pots starting in April 2027 mean you need to plan your pension withdrawals carefully, as they may impact your estate. Business and agricultural properties will also face new limits in reliefs, which could influence your succession plans.

Growing National Debt:

• The country's increasing debt will likely impact interest rates, but the government aims to keep you motivated to grow the economy despite these challenges.

In conclusion, while the latest budget presents some challenges for small business owners, staying informed and proactively adjusting your financial strategies can make all the difference.?

Although these reforms may seem daunting at first, careful planning and a willingness to adapt can help you weather these shifts and continue working towards your financial and business goals.?

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This article was written by the team at Argus Accounting. Our clients have typically been in business for at least two years and have an annual turnover of around ￡500,000.

Argus was founded by Sharon Hirsch in 2020, and our team of 5 has more than 20 years of experience in the accounting and bookkeeping sector.?

Based on Sharon's experiences growing up, and the conversations we have with so many business owners, it's our mission to ensure you can run your business in a way that works for you and your family.

To receive more of our tips for implementing a proactive accounting approach, so that you are more likely to achieve your goals, enter your details at https://bit.ly/proactiveaccountingtips.