Autumn budget statement - October 2024

There was a lot to wade through on that budget - as always, we’ll focus on the impact to hospitality and retail businesses.  

Quick point to note:  this is a summary of the points we think are important and not a detailed budget review - if you would  like to know more about the impact the budget will have on your business, please get in touch.

This update is (roughly) ordered by items we think will have the biggest impact on you business.  

National Minimum Wage

The headline here is that the NLW rate is increasing in April 2025 up to £12.21 (or a 6.7% increase).  In addition, over the coming years the NMW will move to a single rate, with a sharp increase in April to £10 per hour for 18-20 year olds.

As we all know, as NMW moves then we can expect all other banding to follow - we are expecting to see blended wage increases in the coming year of aound 6%.

Employers national insuranceThree changes here.  Firstly, the employers rate moves up from 13.8% to 15% in April 2025.  Secondly, the threshold at which you pay national insurance decreases from £9k to £5k.  Finally, employment allowance increases from £5k to £10k.

So what does this actually mean - well, essentially, for each employee you have, you will pay more national insurance for.  Around £900 for a full timer and £700 for a part timer.    You get an extra £5k off your national insurance bill if you are small enough, but essentially unless you have 5 employees or less, you are going to pay more national insurance.

So depending on your make up of part timers and full timers, you can expect your total wage bill to increase by around 2.5%

A quick pause here…

So thats 2.5% on national insurance and 6% on wages so an 8.5% increase on your wage bill to be expected from April 2025.  The good news is this is smaller than 2022 and 2023 where 10% was the best you could hope for.  

But it is still quite a chunk.

If you want to offset that in £££ terms, you will need to increase menu costs around 3% come April (this will only recover the £££ difference, not the margin and will not cover any other increases).

Business rates relief

Some good news here on the rates cliff edge.  The retail and hospitality relief will remain in the coming year but will reduce to 40% of the business rates (from 75%) with the annual cap remaining of £110,000.  

Interestingly, the government announced the intention to introduce lower sector business rates multiples from 2026/27 when the 40% relief is withdrawn.  

Exactly what this looks like was not announced and does not seem to be in the documents, so we will have to wait and see if this represents an improvement on the 40% relief (we suspect not).

Other indirect impactsFuel duties are held.  Alchol duty on draughts cut by 1.7% with other alcohol duties increasing with RPI.   Corporation tax staying as it is for now with a cap of 25% (current upper rate) guaranteed for this parliament.

Investment

EIS & VCT investment reliefs remain unchanged which is great news as these schemes are both heavily used to get investment into hospitality and retal businesses.

The Capital Gains Tax rates are going up (from 10% to 14% at the lower rates and 20% to 24% at the higher rate).  The lifetime limit of Business Asset Disposal relief (which replaced Entrepreneurs relief way back when) remains at £1m, but will see rates increase as the CGT rates increase (14% and 18%)

ConclusionOn the plus side, inflation is down and, according to government forecasts, is expected to stay down.  We are still going to see pressure on labour costs with the changes annouced today, but pressures in other areas of business are a little lighter than in previous years.

Once again, I suspect we are looking at some menu price increases come the new year, however we have seen some announcements from large companies recently suggesting that consumers cannot continue to absorb price increases - so efficencies will continue to be a key lever for bus