Chancellor Rachel Reeves has made history today (October 30) by being the first female chancellor to announce the choices of the Autumn Budget.
2024's budget outlines Labour’s plans for the first time in 14 years.
Opening her speech, she said that the only way to drive economic growth is to ‘invest, invest, invest’.
The budget will see taxes raised by £40 billion pounds across the UK, to invest back into the country’s public services and local councils.
Key points for small business owners
- Employers’ National Insurance contributions will rise from 13.8% to 15%
- The threshold at which businesses start paying National Insurance on a workers' earnings will be lowered from £9,100 to £5,000
- Employment allowance will increase from £5,000 to £10,000
- Employers will be able to claim up to £10, 500 on their National Insurance bill, up from the previous £5,000.
- The current 75% discount to business rates - due to expire in April 2025 - will be replaced by a discount of 40% - up to a maximum discount of £110k.
Key points for workers
- Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
- Income tax and National Insurance thresholds will freeze until 2028
What this means for small business owners
The chancellor said that her choice to drop the threshold at which businesses start paying NI contributions will raise £25bn.
The 40% discount on business rates could see business rates nearly double (rather than quadruple based on the previous expiration date in 2025).
To help reduce the effect of these changes on small businesses, Reeves is increasing the employment allowance, meaning that “865,000 employers won’t pay any National Insurance at all next year.”
She also said that over one million employers, as a result of this change, will pay the same or less as they did previously.
The budget also emphasises tax simplification and increased digitalisation, which could benefit salon owners by streamlining tax compliance and potentially reduce the administrative burden that many can find overwhelming.
What this means for workers
This budget stayed in line with the previous Conservative budget on personal tax thresholds, freezing until 2028 to prevent people from being dragged into higher tax bands as their wages rise.
"I have come to the conclusion that extending the threshold freeze would hurt working people. It would take more money out of their payslips," said Reeves.
Industry response
Responding to the news, Caroline Larissey, chief executive of the National Hair and Beauty Federation, said:
"We asked the government for support for employers to counteract rising wages so we’re pleased that they have listened and responded with a rise in the Employment Allowance which will benefit some sector businesses, despite the rises to employers National Insurance contributions.
"However, with 16%+ rises in the youth wage rates there was nothing on interim support for businesses training young people. The only ‘youth guarantee’ for our sector will be that small and micro employers won’t be able to afford to take on apprentices.
"This makes it even more vital that Skills England is responsive to the needs of our sector and the new Growth and Skills levy channels major support to incentivise small and micro businesses training apprentices.
"We will engage constructively with the consultation around business rates reform and the decision to keep at least some support through a 40% retail business rates discount and freeze of the small business multiplier is welcome and important in the interim. The government was silent on VAT but we will continue to push for reform which is the sector’s number one issue.
"While the Employment Allowance increase offers some breathing room, the dramatic rise in apprentice wages threatens to disrupt the traditional pathway into our sector. Without targeted intervention, we risk creating a skills gap that could take years to bridge.
"The government's approach to retail business rates shows they're listening, but more comprehensive support is needed to ensure the sustainability of apprenticeships in hair and beauty."
