Guest blog from Leanne Terry FCCA from Clic Accounting Limited – one of our Trusted Partners

As we approach the upcoming 2024 Autumn Budget, speculation is swirling about what changes could be in store for the economy. With inflation pressures, a cost-of-living crisis, and the government’s focus on economic growth, this budget is likely to contain significant measures that will impact businesses, especially small and medium-sized enterprises (SMEs).
Read on for a peek at some of the most talked-about predictions, and explore what SMEs can do to prepare for whatever the Chancellor might announce.
Rumoured Changes to Watch Out For
Please remember, these points are all opinion and speculation and should not be considered financial advice.
1. Tax Reforms
One of the most significant talking points for the upcoming budget is potential tax reforms. The government has hinted at possible changes to corporation tax, although Labour’s manifesto pledged that corporation tax will be capped at the current rate. Of course, nothing is set in stone, so while we’re not necessarily anticipating a rise in corporation tax, we should all be on our guard.
What SMEs should do: To prepare for possible tax hikes, small businesses should consider reviewing their current tax strategies. Engaging with a good advisor now to explore tax relief options or incentives could be a smart move to offset any increases.
2. Capital Gains Tax (CGT)
Capital Gains Tax is another area where changes are rumoured. CGT rates are at historic lows, so increasing them seems a likely possibility. There’s been talk that the CGT changes could possibly include:
- Rates aligning more closely with income tax rates
- Some sort of tapering for longer-term gains, and taxing short-term gains more heavily
- Reducing exemptions
- Introducing CGT on disposal on death (in addition to IHT)
What SMEs should do: If your business has any planned sales of assets or investments, you might want to consider bringing them forward to avoid potentially higher CGT rates. Speaking to a tax professional about possible ways to manage or defer capital gains could also be a wise precaution.
3. Pensions
The government may also consider adjustments to pensions, including introduction of a flat rate of tax relief on pension contributions (ending the advantage that higher/additional rate taxpayers currently have). Whispers are also being heard about employer’s NI contributions being imposed on employer pension contributions, which could affect many of us, and speculation that the 25% tax-free lump sum could be removed or restricted to a certain amount.
What SMEs should do: To get ahead of these potential changes, it’s crucial to work with a qualified financial adviser to reassess your pension strategy, explore cost-effective ways to maintain a competitive benefits package, and keep your team informed about how these shifts might impact their retirement planning. Proactive communication and financial planning support will help your employees navigate these adjustments confidently.
4. Inheritance Tax
Inheritance Tax (IHT) is another area rumoured to be under the microscope in the upcoming budget. There’s speculation that the government might tighten IHT rules or reduce exemptions, potentially increasing the tax burden on estates. This could include lowering the threshold at which the tax kicks in or making adjustments to reliefs that benefit business owners and property investors. If these changes come into play, it could have a significant impact on family-run businesses and individuals planning to pass on their wealth.
What SMEs should do: To minimise the impact of potential changes to Inheritance Tax, now is the time to revisit your succession planning strategy. Working closely with a financial advisor to explore estate planning options, such as lifetime gifts or trust arrangements, can help protect your business and ensure a smoother transition of assets. Early planning will be crucial to reduce any future tax liabilities.
5. Business Rates Reform
Business rates have long been a thorn in the side of small businesses, and there’s been a lot of lobbying for reform. While it’s uncertain whether any sweeping changes will be implemented in this budget, there is a chance that the government might introduce some targeted relief measures or temporary rate freezes to help SMEs.
What SMEs should do: Stay informed about any upcoming announcements regarding business rates. If there’s an opportunity for reduced rates or new exemptions, make sure you apply for them promptly to maximise savings.
6. Employers’ National Insurance
Speculation is building that Employers’ National Insurance could be in the Chancellor’s crosshairs this autumn. While the government has promised not to raise National Insurance for employees, it seems the same commitment may not extend to employers. This leaves businesses bracing for potential increases that could quietly inflate their payroll costs without hitting individual workers directly—at least on paper.
What SMEs should do: If Employers’ National Insurance increases, SMEs will need to act quickly to mitigate the impact on their bottom line. Review your staffing costs and consider how an increase might affect your cashflow and hiring plans. You may want to explore ways to improve operational efficiency or adjust pricing strategies to absorb the extra costs. Ensure your payroll systems are ready for any changes, and if pension contributions are targeted, double-check your pension scheme calculations.
How to Prepare
With uncertainty around the Autumn Budget, SMEs should brace for multiple scenarios. Here are some key steps you can implement fairly quickly to stay resilient:
- Review your cashflow and build a buffer: Strengthen your cashflow by trimming the fat and optimising payment terms to cushion against potential cost increases.
- Engage a financial expert: Professional guidance can help you navigate potential tax changes, identify strategies to maximise efficiency and minimise costs, and last but definitely not least, reduce your stress knowing you have a financial guru in your corner.
- Evaluate financing options: Explore loans or emergency credit lines to ensure you have funds available if budget changes drive up costs.
- Stay agile with staffing: Consider a mix of full-time, part-time, and outsourced roles to manage workforce expenses more flexibly.
- Leverage digital tools: Use automation and digital tools to streamline operations, boost productivity, and cut costs.
Although the upcoming budget is looming over us like a dark cloud, preparation is key to make sure you’re as ready as you can be for whatever changes come your way. Start planning now (today isn’t too soon!) by reviewing your financial strategy, building a cash buffer, and staying informed about any new developments as they unfold.
With the right approach, you can turn the upcoming budget into an opportunity to optimise your financial processes and set your business up for future growth.