How the Budget will impact business
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Expert input - Baines Jewitt directors , from left : Mike Bigley , Anne Cowley , Don Adams , Trevor Cook and Jed Lester .
Budget reflections
How the Budget will impact business
When chancellor Rachel Reeves delivered her Budget , she pledged to “ invest , invest , invest ” to drive growth and “ restore economic stability ”. Stockton-based Baines Jewitt Chartered Accountants explores some of the wider implications for business .
Tax rises Ms Reeves said the Budget will raise £ 40bn in taxes . Employers ’ National Insurance contributions ( NICs ) will be increased from 13.8 % to 15 % from April 6 2025 . Capital Gains Tax rates will also rise . Inherited pensions will fall within the Inheritance Tax net from April 2027 , while reliefs will be reformed on the passing down of agricultural and business assets . The chancellor also confirmed the introduction of VAT on private school fees and the abolishment of the tax regime for non-UK domiciled individuals .
Corporation Tax rates Corporation Tax remains unchanged . This means that , from April 2025 , the rate will stay at 25 % for companies with profits over £ 250,000 . The 19 % small profits rate will be payable by companies with profits of £ 50,000 or less . Companies with profits between £ 50,001 and £ 250,000 will pay tax at the main rate reduced by a marginal relief , providing a gradual increase in the effective Corporation Tax rate .
“ The government has committed to capping the main rate of Corporation Tax at 25 % for the duration of the parliament ,” explains Baines Jewitt director Jed Lester . “ This is currently the lowest in the G7 .”
Capital allowances The Full Expensing rules for companies allow a 100 % write-off on qualifying expenditure on most plant and machinery ( excluding cars ) as long as it is new and unused . Similar rules apply to integral features and long-life assets at a rate of 50 %. The government will explore extending Full Expensing to assets bought for leasing or hiring , when fiscal conditions allow .
Jed explains : “ The 100 % First Year Allowances ( FYA ) for qualifying expenditure on zero-emission cars and the 100 % FYA for qualifying expenditure on plant or machinery for electric vehicle charge points have been extended to March 31 2026 for Corporation Tax purposes and April 5 2026 for Income Tax purposes .”
Business rates For 2025 / 26 , eligible retail , hospitality and leisure properties in England will receive 40 % relief on business rates liability . These properties will be eligible to receive support up to a cash cap of £ 110,000 per business .
Capital taxes Capital Gains Tax rates Capital Gains Tax rates will increase for disposals , other than of residential property and carried interest , made on or after October 30 2024 . The basic rate of 10 % will increase to 18 % and the 20 % rate will increase to 24 %. The rate applying to trustees and personal representatives will increase from 20 % to 24 % from the same date .
Jed says : “ The changes in the main rates of Capital Gains Tax brings them in line with those paid on disposal of residential property . This means that there will be no need going forward to differentiate between the types of property being disposed of .”
Business Asset Disposal Relief and Investors ’ Relief The rate applying for individuals claiming
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