For the first time in 14 years, a Labour government has delivered its UK budget statement.
This year’s budget, delivered by new chancellor Rachel Reeves, has been hotly anticipated. Partially due to it being given by a new government, but also due to the expected changes having far-reaching impacts on various sectors.
As a small business owner, here are the key things you need to know from today’s statement and what they mean for your business.
Despite Labour’s manifesto not committing to any changes to national insurance, mandatory employer contributions are set to rise beyond the current rate of 13.8%. As announced on Wednesday 30th October, businesses are now expected to contribute at a rate of 15%, following an increase of 1.2%.
The rate at which employers are expected to pay national insurance will also decline from £9,100 to just £5,000.
Labour has pledged £500m in support towards building 5,000 homes for social housing. This is particularly beneficial for contractors and property developers, as it presents opportunities to develop government-backed contracts for long-term work.
This commitment was previously outlined in Labour’s manifesto, making it one of the least surprising changes.
3. Capital gains tax changes
Labour also announced a few changes to capital gains tax, which can directly impact business owners looking to sell off a part of or cash out from their business. Specifically, Labour announced that the lower rate of capital gains tax will raise from 10% to 18%, while the higher rate will increase from 20% to 24%. For residential properties, capital gains tax will remain stable. Business asset disposal rates will remain at 10%, raising to 14% in 2025 and 18% in 2026/2027.
Increasing capital gains tax could make such plans less viable, reducing the overall proceeds due to a higher rate of tax.
Labour has long discussed a clear and open plan for raising and reducing various business taxes. Dubbed the “business tax roadmap”.
The plans stretch from a cap on corporation tax of 25%, to a different business rates system that re-balances the playing field between large and small businesses.
One of the most impactful changes to businesses in this year’s budget is the announcement of a £240m pledge to fund an improved workforce and skills development programme, dubbed the “Get Britain Working” package.
This initiative is primarily focused on supporting disabled people, as well as those who are on long-term sick, reducing the unemployment rate across the nation.
The pledge calls back directly to Labour’s manifesto and its aims of getting Britain working again.
Read more: What does the new Labour government mean for businesses?
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