The UK’s Autumn Budget 2024 has introduced some pivotal changes, and while government budgets might not be every founder’s favourite topic, the implications here could be substantial for your startup. From tax shifts to new allowances, rising wages, and evolving digital requirements, this year’s budget touches on practically every facet of business life — from how you hire to how you scale and manage cash flow.

What does this mean for you? Simply put, staying ahead of these changes could mean the difference between steady, sustainable growth and unexpected costs. We’ve broken down each key change to help you understand its impact on your business and plan proactively. Let’s dive into the details, so you can prepare and keep your growth on track.

Capital Gains Tax (CGT) Increase

Capital Gains Tax (CGT) is what you pay on the profit when you sell an asset that’s increased in value — like shares in your company, property, or other investments.

• What’s Changed? From October 30, 2024, the CGT rate has jumped from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher-rate taxpayers. If you’re selling assets (other than your main home), more of that profit will now go to HMRC.
• Impact on Startups: If you’re planning to sell business shares to investors or exit soon, these higher tax rates could leave less in your pocket. That’s especially relevant for founders who have built up equity and were banking on that sale for some liquidity.

Reduction in Investors’ Relief

Investors’ Relief has been a valuable tool for venture investors, offering a reduced Capital Gains Tax (CGT) rate on profits from selling shares in qualifying companies. But with the latest changes, this tax benefit has been scaled back, and the updated limits may make it a little less appealing.

• What’s Changed? Previously, Investors’ Relief allowed for a reduced CGT rate on gains of up to £10 million. Now, the lifetime cap has been cut to £1 million, significantly limiting the benefit for investors looking at substantial returns. This reduction applies to qualifying disposals made on or after 30 October 2024 and even to certain disposals made before this date, which could catch some investors by surprise.
• Impact on Startups: For startups, this reduction in Investors’ Relief could mean tougher negotiations with potential investors, as they may look to offset this smaller tax break with higher return requirements or more favourable terms. While it may still attract smaller investments, larger backers might weigh their options more carefully, so be prepared to address this change when discussing funding.

Employer National Insurance Contribution (NIC) Increase

National Insurance Contributions (NICs) are essentially payroll taxes paid by both employees and employers. When the government raises Employer NICs, it means you’ll pay more for each employee on your payroll.

• What’s Changed? From April 2025, Employer NIC will increase from 13.8% to 15%, and the Secondary Threshold (the earnings level at which employers start paying NIC) drops from £9,100 to £5,000. In plain terms: you’ll start paying NIC sooner, and at a higher rate.
• Impact on Startups: Payroll costs are going up, which is significant if you’re planning to hire or already have a growing team. It could mean reconsidering the pace or scale of hiring plans.

Increased Employment Allowance

Here’s a bit of good news from the budget for small businesses and startups: to help offset the rise in National Insurance Contributions (NICs), the government has boosted the Employment Allowance, giving small employers some extra breathing room on payroll costs.

• What’s Changed? The Employment Allowance, which reduces the amount of Employer NIC you have to pay, will be increased from £5,000 to £10,500 starting in the 2025/26 tax year. This increase essentially doubles the tax break, letting startups retain more capital, especially in those crucial early stages.
• Impact on Startups: The government projects that around 865,000 employers will no longer need to pay NICs at all under this change, with over a million businesses paying roughly the same amount of NIC as they did last year. For many startups, this means you can add up to four full-time employees on the National Living Wage without hitting NIC costs. For businesses working on a lean budget, this allowance boost can be a real game-changer by making it easier to grow your team without stretching your payroll budget thin.

Changes to Business Asset Disposal Relief (BADR)

Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs’ Relief, is a tax break that allows founders to pay lower CGT when they sell shares in their business — but the benefits here are also reducing.

• What’s Changed? Starting April 2025, CGT on qualifying disposals under BADR will increase from 10% to 14%.
• Impact on Startups: If you’re planning to cash in on shares or bring in new investors, this increased tax rate will mean a higher slice goes to the taxman. It could be a factor in planning the timing of any disposals.

Extension of First-Year Allowance for Zero-Emission Cars and Charging Points

Thinking of going green? The government is encouraging eco-friendly business practices by extending the 100% first-year allowance for zero-emission cars and charging points.

• What’s Changed? This allowance lets you deduct the full cost of certain electric vehicles or charging infrastructure from your profits before tax, extended now until March 2026.
• Impact on Startups: If you’ve been considering going electric, you’ll get a tax break on the purchase of zero-emission vehicles and charging stations. This reduces your taxable profits, meaning you could save on your tax bill while boosting your sustainability credentials.

Freeze on the Income Personal Tax Threshold to End in April 2028

The Chancellor announced that the freeze on income tax and National Insurance thresholds — a measure that’s been in place for some time now — will finally end in April 2028.

• What’s Changing? From the tax year 2028-29, income tax thresholds will start increasing in line with inflation. This means personal tax bands, which have been static for several years, will see adjustments that better match inflation, potentially reducing the real tax burden on income earners.
• Impact on Startups: While this change doesn’t kick in immediately, it may make a future difference for both founders and employees when it comes to personal tax planning. For employees, it could mean less “tax drag” on salaries as inflation adjustments keep pace with rising costs of living, possibly reducing the need for wage increases tied directly to tax thresholds.

Update on Business Rates

The business rates discount landscape is set to shift as the current reliefs approach expiration.

• What’s Changing? The current 75% discount on business rates, set to expire in April 2025, will be replaced by a smaller 40% discount, capped at a maximum discount of £110,000. Looking further ahead, from 2026-27, the government plans to introduce permanently lower business rates for properties in high-street retail, hospitality, and leisure, to support these sectors long-term.
• Impact on Startups: If your startup operates in physical spaces, like retail or hospitality, this change could affect your budgeting. Although the 40% discount will still offer some relief, it’s a reduction from the current 75%, meaning some businesses may need to absorb higher rates until the longer-term, sector-specific cuts arrive.

Corporation Tax: Main Rate Holds Steady at 25%

Corporation tax can be a hefty expense for profitable businesses, but for now, the government has chosen not to increase it further.

• What’s Changing? The main rate of Corporation Tax will remain at 25% for businesses with taxable profits over £250,000, at least until the next election. This decision brings a bit of stability, as businesses can plan around this known rate rather than factoring in potential increases.
• Impact on Startups: For highly profitable startups, especially those reaching the £250,000+ profit threshold, knowing that Corporation Tax will stay at 25% helps with mid- to long-term planning. Smaller startups below this threshold can still benefit from lower rates, which will continue based on their specific profit brackets.

HMRC Changes: Higher Penalty Rates and Compliance Focus

HMRC is turning up the heat on overdue taxes and stepping up its enforcement game.

• What’s Changing? The interest rate on overdue tax will increase, making late payments even costlier. In addition, HMRC is boosting its compliance efforts by hiring more officers for criminal investigations, with a focus on ensuring timely tax payments.
• Impact on Startups: For startups juggling cash flow, this means there’s now a higher cost to delaying tax payments. Any late payments will accrue more interest, and with HMRC’s increased compliance focus, there may be closer scrutiny on payment timelines.

Making Tax Digital (MTD) Update

Making Tax Digital (MTD) has been on the government’s radar for a while, and the Labour government is reaffirming its commitment to rolling it out more broadly.

• What’s Changing? MTD will soon apply to businesses with an income over £20,000 per year, with the government aiming for a smooth rollout over the next few years. MTD is all about moving tax submissions online, making tax records digital and more easily accessible.
• Impact on Startups: If your startup hasn’t yet moved to digital tax systems, it’s time to prepare. With MTD, businesses will be expected to keep digital records and submit updates to HMRC directly through MTD-compliant software. For businesses already used to digital bookkeeping, this is less of a shakeup, but for those relying on manual processes, it may require an operational shift.

Increased Stamp Duty Land Tax (SDLT) for Additional Properties

If you’re buying additional property for your business, like new office space or facilities, Stamp Duty Land Tax (SDLT) has become a little steeper.

• What’s Changed? The surcharge for additional properties has gone from 3% to 5%.
• Impact on Startups: For those expanding with property purchases, this will add to initial costs and may impact your cash flow planning. It could also make leasing more attractive than purchasing.

Increased National Living Wage & National Minimum Wage

The government’s new wage increases will mean higher costs for many startups, but understanding the changes — and planning around them — can help keep your growth on track.

• What’s Changed? From April 2025, the National Living Wage for workers aged 21 and over is set to rise by 6.7%, bringing it up to £12.21 per hour. This means full-time employees will see an extra £1,100 in their annual earnings. And for younger workers (18 to 20-year-olds), the National Minimum Wage (NMW) is getting an even bigger lift, increasing by 16% to £10 per hour. These above-inflation hikes are designed to keep up with the cost of living, which is positive for the workforce — but will increase employment costs for startups that rely on entry-level or hourly workers.
• Impact on Startups: If you’re running on a lean budget, these wage hikes could affect hiring plans and payroll flexibility. More of your budget may end up going towards labour costs, meaning less flexibility for reinvestment in growth areas. The enhanced Employment Allowance will help offset some of this cost, but it’s worth looking at the overall impact as these wage rates continue to rise.

Making the Most of the Autumn Budget 2024

The Autumn Budget 2024 brings a mix of new requirements, tax changes, and cost considerations, but with the right planning, you can turn these shifts into strategic opportunities. By staying informed, optimising your cash flow, and adapting early, your startup can navigate these adjustments with confidence.

Whether it’s making the most of the new Employment Allowance, preparing for increased wage costs, or leveraging digital tax requirements to streamline operations, each step taken now strengthens your business’s resilience and adaptability. And remember, at Standard Ledger, we’re here to help you manage these changes — from strategic planning to ensuring your growth goals stay front and centre.