Stability and investment were key themes in Chancellor Rachel Reeves' first budget. This historic announcement, led by the first female Chancellor, highlighted important tax changes for business owners, management teams, and employees.

The government's first budget prioritized stability and investment, setting a steady course for the next five years.

Government Commitments to Business Growth

The budget introduced several key considerations for businesses and individuals alike:

For Businesses

• National Insurance: Effective from 6 April, employer National Insurance Contributions (NICs) will increase by 1.2% (from 13.8% to 15%), with a lowered threshold of £5,000. However, smaller businesses can claim an expanded relief, with a new cap at £10,500.
  

• Corporation Tax: The corporation tax rate will remain capped at 25% for the current government's term, with R&D rates remaining constant.
  

• Business Rates: The existing 75% business rate discount, due to expire in April 2025, will transition to a 40% discount with a cap of £110,000, effectively doubling rates for many businesses.
  

For Individuals

• Minimum Wage: Effective next April, the minimum wage for individuals 21 and older will increase by 6.7% to £12.21 per hour.
  

• Income Tax and National Insurance Thresholds: No adjustments to income tax and NI thresholds will be made, but from 2028/29, these thresholds will again adjust in line with inflation.
  

• Capital Gains Tax (CGT): The CGT rate on asset sales will rise, with the lower rate moving to 18% and the higher to 24%. Changes will take effect on 30th October 2024. For business owners, Business Asset Disposal Relief (BADR) will increase to 14% in April 2025 and to 18% in April 2026.
  

• Inheritance Tax (IHT): IHT thresholds will remain frozen until 2030, with further changes to Business Property Relief and Agricultural Property Relief set to take effect in 2027, limiting relief to assets valued over £1 million.
  

Key Areas for M&A Strategy

The budget highlights government support in several areas for growth and investment:

• Enterprise Investment Scheme: Continued support to drive investment into early-stage companies.
  

• Skills Development: New plans under Skills England aim to encourage workforce engagement and development.
  

• Industrial Strategy: Further details forthcoming, with an emphasis on innovation and long-term sector growth.
  

• R&D Tax Incentives: Ongoing incentives for businesses to invest in product, system, and service R&D.
  

Employers should prepare for increased costs in staffing, driven by national wage hikes, rising NICs, and extended employee protections covering parental leave and dismissal rights from the start of employment.

Next Steps for Business Owners

This budget marks the beginning of a new fiscal chapter for the UK's business community. GS Verde Group will be releasing a full list of these budget changes on our website once final details are confirmed. For business owners and management teams looking to adapt their strategies or explore new opportunities, we invite you to reach out and explore how we can support your goals.

GS Verde Group's Insights on the M&A Environment

Joel Dunning, Head of Tax & Accounting at GS Verde Group, shared his perspective on the budget's impact:

"Employers have been holding their breath amidst the rumours and news over the past three months - whilst businesses and employers will carry an additional burden through increased taxation on employment and increased reference rates on sales of businesses over the next 2-3 years, the proposed increases were lower than widely rumoured and expected. This allows business owners and management teams to plan their growth, investment, and M&A strategy in the short and long term."

This stabilised approach offers businesses an opportunity to plan effectively as the fiscal landscape evolves, fostering a more robust environment for M&A activity, particularly for SMEs.

GS Verde Group's Multi-discipline Advantage

Navigating today's complex and evolving business climate requires access to a well-rounded team of legal and financial experts. At GS Verde Group, we provide tailored, expert guidance at every stage of a transaction.

Our multi-discipline approach brings together legal, corporate finance, tax, accounting, and communications expertise under one roof. With our unique 'One Team' structure, clients benefit from a comprehensive strategy that helps maximise returns and ensures compliance with new tax policies, creating a smoother transition through these changes.

Photo credit: Britain's chancellor Rachel Reeves poses with the red budget box as she leaves 11 Downing Street. Photograph: David Levene/The Guardian