The Autumn Budget brought substantial changes for small and medium-sized enterprises (SMEs).
These changes included higher employer National Insurance (NI) costs, increased Capital Gains Tax (CGT) rates, and tighter Inheritance Tax (IHT) relief, all of which have given business owners plenty to think about when it comes to their personal finances.
However, careful planning and implementing the right strategies can lead to more opportunities for stronger, sustainable growth.
Revisiting workforce costs under higher NationaI Insurance rates
Starting in April 2025, employer National Insurance contributions (NICs) will increase to 15 per cent, and the threshold will drop to £5,000.
This means higher payroll expenses for SMEs already working within tight margins.
Instead of simply absorbing this cost, consider adjusting your workforce mix by balancing salaried employees with contractors, or exploring flexible and hybrid roles.
Fine-tuning your payroll strategy now could help manage the impact of rising NICs.
Smart planning for Capital Gains Tax changes
With CGT rates moving up to 18 per cent for lower bands and 24 per cent for higher bands, it is more important than ever to review personal asset plans.
Selling assets strategically, using phased transfers, setting up trusts, or rebalancing personal investments can help mitigate these tax impacts and safeguard your long-term financial health.
Preparing for wage increases
The national living wage rise to £12.21 per hour means higher labour costs, a 6.7 per cent increase that will affect many SMEs.
While supporting employees is paramount, higher wages do not have to reduce your bottom line.
Take this as a prompt to review your operational efficiency. Could automation, streamlined processes, or workflow improvements help maintain productivity with minimal impact on your budget?
A leaner, more efficient approach could be the key to staying competitive.
Planning around future Inheritance Tax adjustments
Changes to IHT relief will kick in from April 2026, capping full relief on business and agricultural assets at £1 million and offering only 50 per cent relief on amounts over this threshold, which translates into a 20 per cent effective tax rate on larger estates.
Unlisted shares, including those on AIM, will now qualify for only 50 per cent relief.
Considering options like trusts, lifetime transfers, and asset reallocation can help you optimise your estate plan and secure your legacy.
Making the most of business rates relief and the increased Employment Allowance
The Budget has extended business rates relief for retail, hospitality, and leisure sectors and increased the Employment Allowance to £10,500.
These measures offer a cushion against rising costs.
By maximising these allowances, you can protect cash flow and reinvest savings in growth, keeping your business ready for new opportunities.
For more advice and steps to strengthen your business and your personal finances post-Budget, speak with our professional team of accountants today.