Jeremy’s big pitch yesterday was that this Budget was all about getting people back to work. To this end a range of schemes were rolled out to lure the “economically inactive”, back into the workplace. These schemes seem to be mainly targeted at the over-50’s, so “economically inactive “, in this context appears to mostly mean “people who have retired early “. There is even going to be a new apprenticeship scheme for over 50’s called the “returnership “. I can’t see that one being turned into a popular reality TV show featuring Sir Alan Sugar.
There was some good news for new parents with the extension of free childcare to children for 1- and 2-year-olds, though not until September 2025. However, there was no backing down on the huge corporation tax rate hike from 19 to 25% that Jeremy flagged in the Autumn statement. With all the main personal tax thresholds and allowances frozen for yet another year, there is no getting away from the fact that we are now living through a period of exceptionally high taxation. The last time the overall tax burden as a percentage of GDP was this high was during WW2, which is remarkable given we have had a Conservative government for the last 13 years.
Let’s have a look at a couple of the main headline grabbing measures announced yesterday by Jeremy, and their impact on small businesses:
In practice for most small business owners the main impact of this Budget will be a significant increase in tax bills, both individual and corporate. The freezing or in some cases reduction in the various tax allowances and rate bands is likely to add around £1,000 annually to the tax bill of someone currently earning £40,000, assuming their income increases in line with inflation.
Similarly for small companies making profits over £50,000 the effective tax rate between £50,000 and £250,0000 is now 26.5%, resulting in the following additional tax –
Profit 22/23 23/24 Increase
£60,000 11,400 12,150 750
£75,000 14,250 16,125 1875
£100,000 19,000 22,750 3750
Main tax rates Summary
Personal allowance £12,570 unchanged
Basic rate 20% £12,571-50,270 unchanged
High rate 40% £50,271-125,140 £50,271-150,000
Additional rate 45% over £125,140 over £150,000
Dividend allowance £1,000 £2,000
Basic rate 8.75% unchanged
Higher rate 33.75% unchanged
Additional rate 39.35% unchanged
Corporation tax rates
Main rate 25% 19%
Small profits rate 19% –
Marginal relief lower limit £50,000
Marginal relief upper limit £250,000
If you have any questions please feel free to email as individual circumstances vary,