How Will the Autumn Budget Impact You? Advice for Individuals, Businesses, and Business People
The Autumn Budget brought sweeping changes to the UK, so to help, we’ve put together some helpful information below.
However, before you make any decisions, especially those relating to your business or inheritance planning, be sure to talk to one of our legal team.
Employment: Navigating Staff Costs and Compliance
For many businesses, the budget’s impact on employment costs will be profound and key changes include:
National Insurance Contributions (NICs)
From April 2025, businesses will pay a higher rate of NICs – 15% on salaries above £5,000, up from the previous 13.8% on £9,100. This will mean higher expenses for employers, especially those with large payrolls.
Employment Allowance Boost: Smaller businesses will benefit from an increase in the Employment Allowance to £10,500 per year. This change could offset some of the burden of the higher NICs rate, although it may not fully compensate for the new costs.
Minimum Wage Increases: The minimum wage for over-21s will increase from £11.44 to £12.21 per hour, while wages for younger employees will see a significant rise too—from £8.60 to £10 per hour. This increase could make staffing more expensive, and if not managed well, could lead to cash-flow issues or even forced layoffs.
Considerations for Businesses:
Seek Legal Advice BEFORE Making Changes
Before reducing working hours, considering redundancies, cancelling sub-contractors or even closing the business, it’s critical to consult legal experts.
While you may be making decisions that seek to protect the business, get them wrong and it could lead to costly employment tribunal claims or litigation.
Capital Gains Tax: Planning Ahead for Business Sales and Retirement
With potential increases in Capital Gains Tax (CGT) rates from next year, business owners and those planning for retirement may need to consider timing carefully. Selling assets before April 2025 could avoid higher CGT rates, providing a significant tax advantage.
Selling a Business or Large Asset: If you’re contemplating the sale of a business or another high-value asset, accelerating your plans might help reduce your CGT burden.
Example Scenario: Imagine a family-owned business planning a sale to fund retirement. Waiting until after the CGT rate hike could mean losing a considerable portion of the proceeds to tax. Accelerating the sale and securing expert legal advice on structuring the transaction could preserve much of the intended financial benefit for retirement or inheritance.
Pensions: Protecting Your Estate and Legacy
New rules mean that unused pension funds and death benefits payable from pensions will form part of an individual’s IHT estate, which could impact those planning to leave significant assets to loved ones.
Planning for Inheritance: If your pension is now part of your estate planning, it could be subject to IHT. For individuals with large pension pots, this could mean less inheritance for beneficiaries if no proactive steps are taken.
Consider Trusts and Gifting: Legal advice can help set up family trusts or develop in-life gifting strategies, which could shield assets from IHT, ensuring your legacy aligns with your wishes.
Example Scenario: An individual with a £500,000 pension pot, previously outside their estate, may now find it taxed upon their passing. Working with legal advisors to establish a family trust or gifting strategy can help minimise these taxes and maximise what beneficiaries receive.
Inheritance Tax: Protecting Wealth for Future Generations
The Inheritance Tax (IHT) system is under review, with potential impacts on family-owned farms, homes, and personal estates.
Currently, IHT is charged at 40% on estates over £325,000, and married or civil-partnered couples can pass up to £1 million tax-free to direct descendants if they meet certain conditions.
It was confirmed that the allowance of £325,000 is frozen until 2030.
The decision to freeze the figure as opposed to increase it in line with inflation, means that many people will likely find themselves caught in the IHT trap. Families may need to revise their inheritance strategies to ensure assets pass efficiently to the next generation.
Example Scenario for the Agricultural Sector: A family-run farm in Neath, valued at £850,000, is passed down through generations and currently benefits from agricultural property relief, reducing the estate’s IHT liability. However, potential changes to IHT rules could impact the eligibility for such reliefs. To ensure the farm remains within the family, proactive steps like consulting on trust structures, joint ownership options, or in-life gifts could protect the estate. By working with legal experts, the family can align their estate planning with current rules and maximise IHT reliefs, safeguarding the farm’s legacy.
Considerations for Individuals and Families:
IHT Reliefs for Farms and Agricultural Properties: Verify eligibility for agricultural property relief (APR) or business property relief (BPR), as changing rules could affect these allowances.
Strategic Estate Planning: Implementing tax-free annual gifts, establishing trusts, and arranging joint ownership can minimise liabilities, ensuring wealth is protected for future generations.
From employment costs to capital gains, pensions, and inheritance tax, these budget measures will have significant implications and for many, expert legal advice will be the best way to protect your interests.
Contact Peter Lynn and Partners today to ensure you’re prepared for these changes and to avoid legal pitfalls that could arise in this evolving landscape:
01792 450010
Peter Lynn and Partners
Preventing Legal Problems.