On Wednesday, October 30th, 2024, the UK government delivered its annual budget, which outlines its plans for the UK public for the coming year. In this article, we highlight the likely impact of the 2024 Autumn budget on digital-based small businesses.
The 2024 Autumn budget full policy document can be found here. For further clarification on better assessing the Autumn budget’s impact on your business operations, kindly consult a qualified accountant.
Key Changes
National Insurance Contributions (NIC)
The 2024 Autumn Budget introduces significant changes to employers’ National Insurance contributions (NICs). From April 2025, the rate will increase by 1.2 percentage points to 15%, and the threshold at which employers start paying NICs will drop from £9,100 to £5,000 per employee. To offset this impact on smaller businesses, the Employment Allowance will increase from £5,000 to £10,500, meaning employers can claim relief on NICs up to this higher amount. This change aims to protect smaller digital businesses while still generating substantial revenue for the Treasury, with the NIC changes expected to raise £25 billion annually.
Minimum wage and Living wage.
The 2024 Autumn Budget introduces significant changes to wage structures, effective April 2025. The National Living Wage will rise to £12.21 per hour for workers aged 21 and above, marking a 6.7% increase. For employees aged 18 to 20, the minimum wage will see a substantial 16.3% jump to £10.00 per hour. Apprentices will also benefit from an 18% increase, with their minimum wage set at £7.55 per hour. These adjustments aim to address cost of living concerns and reduce age-based wage disparities, potentially impacting SMEs’ operational costs while boosting worker incomes
E-invoicing
The Autumn Budget 2024 presents a mixed landscape for digital SMEs. While it offers significant opportunities through technology investments and innovation support, businesses should also prepare for potential challenges.
These include increased operational costs due to tax and employment-related changes. Additionally, digital SMEs should be aware of the upcoming consultation on e-invoicing in early 2025, which may lead to changes in invoicing practices.
Ultimately, success will likely favour those businesses that can adeptly navigate these changes while capitalizing on available support and funding opportunities. By doing so, they can position themselves for growth in the evolving economic environment of the coming years.
Final Thoughts
The Autumn Budget 2024 presents both opportunities and challenges for digital SMEs. While increased National Insurance contributions and rising wage costs may pose initial hurdles, the enhanced Employment Allowance offers crucial support for smaller businesses.
The government’s commitment to technology investments signals a strong push towards a digital-first economy, providing SMEs with opportunities to leverage new funding and support for growth. Additionally, the upcoming e-invoicing consultation in 2025 presents a chance for businesses to streamline operations and enhance efficiency.
Ultimately, success will depend on how well digital SMEs adapt to these changes and capitalize on available resources. By staying agile and embracing innovation, they can position themselves for sustainable growth in an evolving economic landscape. Consulting with financial advisors will be essential for navigating these changes effectively.