Chancellor Rachel Reeves delivered her first Budget on Wednesday the 30th of October 2024 and it was primarily based on driving growth and restoring the country’s economic stability.
Here we take a look at some of the Budget highlights that will impact you as a limited company contractor.
National Insurance contributions
The matter of Employers’ National Insurance (NI) is likely one of the most concerning changes for many businesses, with the government announcing that it will increase this rate from 13.8% to 15% from the 6th of April 2025.
You can read more about this on our news story page.
The Secondary Threshold, which is the point at which employers become liable to pay NICs on an individual employee’s earnings (currently set at £9,100 a year), will be reduced to £5,000 a year from 6th April 2025 until 6th April 2028 and then will increase by Consumer Price Index (CPI) thereafter.
Class 4 rates of self-employed NICS remain the same from April 2025 at 6% and 2%.
Self-employed workers with profits of £6,725 and above get access to contributory benefits, including the State Pension, through a National Insurance credit, without paying Class 2 NICs.
Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so.
Employment Allowance
A positive change for businesses is that from the 6th of April 2025, the government will increase the Employment Allowance from £5,000 to £10,500 and remove the £100,000 threshold for eligibility, expanding this to all eligible employers with employer NIC bills.
Responding to this, Policy Chair of the Federation of Small Businesses (FSB), Tina McKenzie, said, “Increasing the employment allowance for small businesses by a record amount is a very welcome move and we’re pleased the Chancellor has heard us loud and clear. More than doubling it, from £5,000 to £10,500, will shield the smallest employers from the jobs tax, therefore it is a pro-jobs prioritisation in a tough Budget.”
Business rates
In the 2025/26 tax year, all eligible retail, hospitality and leisure properties in England will receive 40% relief on their business rates liability; properties will also be eligible to receive support up to a cash cap of £110,000 per business.
National Living Wage and National Minimum Wage
National Living Wage (NLW) and National Minimum Wage (NMW) rates are set to increase from the 1st of April 2025.
- For those aged 21 and over – increasing from £11.44 to £12.21
- For those aged 18 to 20 – increasing from £8.60 to £10.00
- For those aged under 18 – increasing from £6.40 to £7.55
- For apprentices – increasing from £6.40 to £7.55
Need help deciding between Limited or Umbrella? We are happy to help- give Sophie a call on 01442 795 100 or email sophie.lewis@dolanaccountancy.com
Corporation Tax
The current rates of Corporation Tax will not change, meaning from April 2025 the 25% rate will remain for companies with profits over £250,000.
This figure of 25% will be capped for the duration of the Parliament.
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.
Capital Gains Tax
The government has increased Capital Gains Tax rates for disposals, other than of residential property and carried interest, made on or after the 30th of October 2024.
The basic rate will increase to 18% (from 10%), while the 20% rate will increase to 24%.
Company cars
Company car tax rates for 2025/26 have been amended – the charge for zero emission cars will rise from 2% to 3% and for other cars, this will rise by 1%, while the maximum benefit of 37% remains.
Benefit in kind rates are to increase for the tax years up to and including 2029/30.
Creative industries boost
From the 1st of April 2025, film and high-end TV productions will be able to claim an enhanced 39% rate of Audio-Visual Expenditure Credit (AVEC) on their UK visual effects (VFX) costs.
The Chancellor also confirmed the Independent Film Tax Credit UK – films with budgets under £15 million and a UK lead writer or director will be able to claim an enhanced 53% rate of AVEC from 1st April 2025.
The rates of Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief will be set at 40% for non-touring productions and 45% for touring productions and all orchestra productions, applying UK-wide.
HMRC investment
The government has pledged to invest more into HMRC to reduce the tax gap by:
- Investing in additional HMRC compliance and debt management staff
- Modernising HMRC’s debt management IT systems
- Increasing HMRC’s late payment interest rate by 1.5%
- Pre-populating tax returns with Child Benefit data.
However, the CIOT has concerns that this could negatively impact those needing tax support. You can read more about this on our news story page.
Our Budget page provides a more detailed breakdown of the Autumn Budget 2024.
We hope you found this page helpful. If you have any further questions, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com. Alternatively, contact us via live chat.
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