Business
What the Autumn Budget 2024 means for UK businesses and growth
Rachel Reeves, Labour’s first Chancellor of the Exchequer in 14 years, delivered her “growth budget” on 30 October 2024. Touted as a plan to “invest, invest, invest,” the budget focused on boosting productivity, tackling climate change and addressing long-standing issues in public services. But alongside opportunities, it also introduced challenges, particularly for businesses grappling with rising operational costs due to higher taxes.
But does it live up to expectations? And how can challenges be turned into opportunities? Here’s a breakdown of the key announcements and what they could mean for businesses navigating the months and years ahead.
Tax hike challenge
The budget’s ambitions come with a hefty price tag: a £40bn tax increase. And businesses will shoulder much of this burden through rising operational costs:
- Employer National Insurance (NI) will rise from 13.8% to 15% from April 2025, while the threshold for paying NI will drop from £9,100 to £5,000. This means businesses will face higher contributions for each employee’s salary.
- Business rates: Despite a relief package introduced for certain sectors, many others will see costs rise with new valuations taking effect.
During Soldo’s Budget panel discussion, Baroness Ayesha Hazarika, Member of the House of Lords highlighted the scale and boldness of the budget while recognising that the real test will be whether it delivers change that can actually be felt.
This significant tax rise could dampen business confidence, especially for small and medium-sized enterprises (SMEs) and startups operating on tight margins. The challenge lies in creating a sustainable operational model and funding growth amid cost pressures.
Finding growth opportunities
While the tax increases are a hurdle, the budget offers businesses opportunities for growth and investment.
- Support for digitisation and productivity
Labour’s focus on technology offers businesses an opportunity to modernise operations. The SME Digital Adoption Task Force and the Help to Grow Management Scheme are designed to help small businesses harness digital tools.
Pooja Bhachu, Director of Public Policy at Mastercard, noted that helping businesses adopt technology is one thing, but giving them the skills to use it effectively is critical for unlocking productivity gains. - Research and development (R&D) and innovation
With £20.4bn allocated to R&D by 2026, the government aims to strengthen innovation in key sectors, including life sciences and artificial intelligence. Businesses can benefit from sustained R&D tax credits, an important incentive for those investing in innovation. - Relief for key sectors
Retail, hospitality and leisure businesses will benefit from reduced property rates and an additional £1.9bn in small business support. These measures are expected to provide short-term relief, helping businesses stabilise.
Balancing the challenges with a strategic approach to spend management
The pressure of rising costs and opportunities for growth demands a strategic approach to financial management. Businesses must:
- Manage spend proactively through real-time visibility and enhanced controls
- Streamline operations to reduce administrative burdens
- Increase budget impact to allocate resources more effectively using relief schemes and tax incentives.
Looking ahead
While tax increases present immediate challenges, the government’s focus on technology, productivity and innovation opens doors for long-term growth. Sir David Lidington, former Deputy Prime Minister, noted the UK’s deep-rooted issues won’t be solved overnight, but that a focus on investment, combined with consistency of policy, will provide businesses with some certainty going forward.
To hear more and get a full breakdown of the Autumn Budget’s business implications, watch our Autumn Budget 2024 edition of The CFO Playbook podcast.
