Response to October 2024 Budget

Initial Response to the October 2024 budget
As we analyse the implications of the 2024 Autumn Budget, it’s clear that this fiscal strategy introduces both challenges and opportunities for individuals and businesses alike. It will take more than a penny off a pint to make you feel good after this one!
At Pickerings Solicitors, we believe in empowering our clients with the knowledge to navigate these changes effectively. From significant adjustments to pension taxation to increased National Insurance contributions, the budget impacts many aspects of financial and estate planning and the cost of running a business. This article highlights the key points from the budget that clients should be aware of, as well as the opportunities these changes present for proactive planning and decision-making.
The budget is often a mixed bag of opportunities and challenges for employers. The 2024 Autumn Budget has raised crucial questions for business leaders around cost management and strategic planning, particularly with changes to National Insurance (NI), employment allowances, and minimum wage. For small businesses, these adjustments may prompt a rethink of workforce models and investment strategies to navigate the heightened expenses and evolving market conditions.

Key Autumn Budget 2024 changes with significant impact:
1. National Insurance Increase: The budget raises the employer's National Insurance (NI) contribution by 1.2 percentage points to 15%, effective at an earlier threshold of £5,000 (down from £9,100). This measure impacts most companies, potentially discouraging wage increases and hiring in some sectors due to the increased cost burden. While this aims to raise substantial revenue for government initiatives, it could lead businesses to reconsider pay rises and pause on recruitment in order to manage expenses. This combined with the proposed protection from unfair dismissal from day one could severely impact jobs growth.

2. Employment Allowance Adjustment: To offset the NI hike for small businesses, the budget raises the Employment Allowance from £5,000 to £10,500, reducing NI liabilities for around 865,000 small businesses. This adjustment provides small enterprises with some protection against rising employment costs.
3. Minimum Wage Increase: The budget includes a 6.7% increase in the minimum wage to £12.21 per hour. Although this move improves pay for lower paid workers, it could also increase payroll expenses for employers, especially those relying heavily on minimum-wage staff. Employers in sectors like retail and hospitality may face added financial pressure, leading them to explore cost-saving strategies, potential adjustments to workforce structure and price rises to goods and services.

4 Incentives for AI and Automation: As employment costs rise, the budget’s impact could accelerate businesses’ shift towards automation and AI to optimise operations and reduce reliance on human labour, especially in fields such as technology, marketing, and manufacturing. Higher employer contributions may encourage investment in AI-driven solutions to handle administrative and operational tasks to mitigate the financial strain.

5 Business Taxation: Changes in business taxation are designed to promote long-term stability. The government has committed to keeping the corporation tax rate at 25% for five years, a move expected to give employers a clearer framework for planning and investment.
In a move to maintain relative stability business asset disposal relief will remain at 10% this year before rising to 14% in April 2025 and to 18% from 2627. This will be welcome news to business owners hoping to retire and sell their businesses in the near future.

6 Agricultural Property Relief; Changes to Agricultural Property Relief (APR) are likely to impact significant numbers of farm estates, including small and medium-sized enterprises, and an above-inflation hike in the National Living Wage (NLW), with the rate for over 21s increasing 6.7% to £12.21 from April. Defra also said it would accelerate the tail-off of direct payments for the largest recipients – and set the reduction on the first £30,000 of all payments at 76% for next year, with 100% reduction beyond that. This is likely to have a significant impact on family run farms involved in food production.
Combined with the news that inheritance tax relief for farms will be limited to £1million this has proven a very harsh and detrimental budget for the farming community.

In conclusion, the 2024 Autumn Budget marks a pivotal moment for individuals and businesses, particularly in areas such as pension taxation and employment costs. For some indiividuals this budget will necessitate a re-evaluation of financial strategies, while increased National Insurance contributions may influence decisions on recruitment and pay rises. However, amidst these changes lie opportunities for strategic planning and investment in automation. 

At Pickerings Solicitors, we are committed to helping our clients navigate this evolving landscape, ensuring they are well-equipped to seize the opportunities for sustainable growth and success. We invite you to contact us for tailored advice that meets  your unique needs in this changing environment.
We will also be running a series of articles in the near future with a more indepth look at some of the recent changes.