What The Autumn 2024 Budget Means For Founders and SMEs
Today on October 30, 2024, Rachel Reeves strode into the House of Commons and delivered Labour’s first budget in 14 years—a bold, unapologetic bid to reshape Britain’s economic future. Just months after her party’s sweeping election victory, the new Chancellor cut straight to the chase: it’s time to face the “£22 billion black hole” in public finances.
Casting this as a “Budget of fixing the foundations and change,” Reeves didn’t just talk policy; she dropped the hammer, announcing a staggering £40 billion in tax hikes—the kind of headline-grabbing move Britain hasn’t seen in years. Framed as an urgent rescue mission, today’s budget went heavy on the rhetoric, painting the tight fiscal situation as a hangover from Conservative rule. No soft landings here. Instead, Reeves is signaling to Britain: Her message? The freewheeling days are over, and it’s time to pay up.
But what does this mean for Founders? In a budget crafted to signal transformation, the Chancellor has unveiled a financial landscape that blends ambition with stark realities for Britain’s entrepreneurs. With Capital Gains Tax rising, the non-dom tax regime on the way out, and private school fees facing a VAT hit, the new budget has something to say about fairness—but its implications for founders and small businesses are far-reaching.
While reading this summary I felt like I was on an emotional rollercoaster, I drew my breath, sighed with relief, laughed for the billionaires and cried for my school fees!
This budget summary has been kindly provided by Milltown Partners.
Your personal taxes
Capital Gains Tax (CGT) increase - This was a Labour manifesto commitment, and the Chancellor today confirmed that the lower rate will increase from 10% to 18%, while the higher rate will increase from 20% to 24%. The rates on residential property will be maintained at 18% and 24%. This is lower than had been briefed, with some expecting CGT to rise as high as 39%. The Chancellor stressed that this remains the lowest rate amongst European G7 members, and will raise £2.5 billion.
Business Asset Disposal Relief (BADR)
The lifetime allowance for BADR will be maintained at £1 million. The Business asset disposal relief rate will remain at 10% this year, before rising to 14% in April 2025 and to 18% from 2026-27.
Carried interest reform - This was another manifesto commitment, and the Government will increase CGT on carried interest to 32% from the current rate of 28% from April 2025. From April 2026 there will be further reform to simplify carried interest rules and to make them more targeted.
Non-dom tax regime to be abolished
The concept of domicile will be removed from the UK tax regime from April 2025. The OBR has predicted that this will raise £12.7 billion over the next five years. In order to encourage investment into the UK, the Government will introduce a new residence scheme for those coming to the UK temporarily from April 2025. Individuals who opt-in to the regime will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence. The Government will also extend the existing Temporary Repatriation Relief to three years.
Tax on private schools
Private school business rates relief will be removed from April 2025 and VAT will be charged on private school fees from January 2025. This is earmarked to raise £1.8 billion, which will be reinvested in state education. There are exemptions available where children with SEND have needs that can only be met by private schools.
Your business taxes
Employer National Insurance Contribution (NIC) increases - Employer NICs will increase by 1.2 percentage points to 15% (currently at 13.8%) from April 2025 and the secondary threshold, the threshold at which employers pay NICs, will be reduced from £9,100 per year to £5,000 per year. This will raise £20 billion by the end of the forecast period.
The employment allowance for SMEs will increase from £5,000 to £10,500 - This increase and the removal of the £100,000 threshold will mean that 865,000 employers will pay no NICs next year. This will allow small businesses to employ on average four National Living Wage workers without paying additional NICs.
Corporation Tax
Corporation tax will be maintained at 25% over the duration of this Parliament. This will maintain corporation tax in the UK at the lowest rate across the G7.
R&D and capital allowances
Full expensing, the Annual Investment Allowance and the enhanced R&D relief rates that were introduced under the previous Government in the Autumn Statement 2023 have all been maintained for this Parliament (as set out in the 2024 Corporate Tax Roadmap published alongside the Budget).
10-year extension of the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme - This had been pre-announced but was reconfirmed by the Chancellor.
Business rate reform
From 2026-27 permanently lower tax rates will be introduced for retail, hospitality & leisure (RHL) properties. For 2025-26, the small business multiplier will be frozen, and RHL properties will receive 40% business rate release, capped at £110,000 per business. This represents £1.9 billion in support for small businesses.
A 6.7% minimum wage rise
This will see minimum wage rise from £11.44 to £12.21 per hour. 18-20 year olds will benefit from a 16.3% increase, taking their hourly pay up to £10. The rise in the rate for 18-20 year olds is the first step to creating a single adult rate.
This isn’t just another fiscal tweak; it’s a reshaping of the rules that affect everything from investment exits to employment costs. The rise in Employer National Insurance Contributions, coupled with tighter thresholds, means higher overheads for companies trying to scale. And while extended reliefs and allowances hint at encouragement, they may only soften the blows of a more expensive business environment. As the government manoeuvres between promoting growth and appeasing fiscal responsibility, founders and small business owners are left balancing the books in a landscape that’s about to look very different.
