The Chancellor referred to today’s announcement as a “Budget for Growth” – but for many UK employers, it could prove the opposite.
In a historic shift for UK tax policy, today’s Budget unveiled the most substantial tax increases since 1993, aiming to generate an additional £40 billion for the Exchequer.
The most significant change impacts employers’ national insurance contributions, where an increase in the rate from 13.8% to 15% was widely anticipated. However, the reduction of the threshold from £9,100 to £5,000 adds an unexpected burden, translating to an additional cost of £615 per employee.
While small businesses may benefit from reliefs, this policy will heavily impact the broader SME sector, raising concerns about the UK’s competitiveness in attracting talent. The Office for Budget Responsibility (OBR) warns that much of this cost may be passed down to workers through lower wages, raising questions about the Budget’s effect on household incomes.
Beyond national insurance, other major tax adjustments include immediate increases in capital gains tax and changes to inheritance tax on business and agricultural relief. Business Asset Disposal Relief remains intact, though additional restrictions may alter estate planning strategies.
Read on for a detailed breakdown from the Xeinadin tax team, and reach out to your local advisor to discuss how these changes could affect you.
