We went to lively Altrincham-based California, the gourmet coffee shop on Oxford Road. The familiar clink of cups and the morning buzz are all around as we settled down with Murray to discuss the Chancellor’s latest Budget…
Q: Murray, is this one of your ‘go-to places’ then?
Murray: There’s plenty of choice in Altrincham and Hale and this is certainly high on our list as a decent place to have a coffee with clients, contacts or just to come along and think about business.
In my experience, they serve decent freshly roasted coffee and have an excellent brunch menu using locally sourced ingredients.
Q: Murray, let’s talk about the latest Budget. It seems like it’s packed with changes for business owners. What’s your overall take?
Murray: Absolutely. A lot of what we’d heard whispers about actually made it through – especially the increased national insurance contributions expected from businesses. It’s clear the Chancellor is looking to bridge the funding gap that exists, and this Budget seems to expect SMEs to contribute a fair bit more to support future investments. It’s going to be tough for many.
Q: Let’s talk NIC first. What are the main changes there?
Murray: Definitely an area to get on top of if you run a business. Starting in April 2025, Employers’ National Insurance Contributions (NIC) will go up to 15%. Plus, the threshold at which you start paying Employers’ NIC is dropping from £9,100 to £5,000, meaning a lot more of your employees’ earnings will be subject to NIC.
On the plus side, they’ve raised the Employment Allowance to £10,500, which should ease the burden for smaller businesses. But overall, for most SMEs, this NIC change is going to hit hard – higher contributions on a lower threshold means increased outgoings, just when everyone’s trying to keep costs down.
Q: And on top of that, there’s an increase in minimum wages?
Murray: Yes, both the National Living Wage and the National Minimum Wage are rising. It’s good news for employees, but it adds more financial pressure on employers. Many SMEs, which are already stretched, are going to feel this acutely, especially those in sectors like retail and hospitality. With rising wages and NIC changes, it’s a one-two punch for a lot of small business owners.
Q: What about entrepreneurs thinking of exiting their businesses? Are there any changes there?
Murray: There is indeed a window of opportunity to consider. The Business Asset Disposal Relief (BADR) rates are going up next April, so entrepreneurs considering an exit should note this. Until the 5th of April 2025, BADR rates remain at 10% although the standard rate of capital gains tax has increased from 20% to 24%. From 5th April 2024 the BADR rate increases to 14%, with a further increase to 18% for the 2026-27 tax year. I expect to see a rise in business sales as people aim to secure the current lower rates.
If you’re planning to exit soon, it might be worth accelerating those plans to lock in the better tax treatment while you can. But of course, careful planning here is essential and this is where our team can help.
Q: And I hear pensions are also being impacted? What’s the story there?
Murray: That’s right – this is a big one. The Chancellor has introduced an Inheritance Tax (IHT) on pension death benefits. So, if pension benefits are passed into an estate, they’ll be subject to IHT, which could significantly impact retirement and estate planning. Pensions were often seen as a tax-efficient way to pass on wealth, but this change means you may need to rethink that strategy.
It’s a complex area, and it’ll be crucial to look at how you’re structuring your pension and estate plans moving forward. We work with a range of financial advisers and can point people in the right direction for specific advice in this regard.
Q: With all these changes, any last thoughts for entrepreneurs and small business owners?
Murray: The key takeaway is that proactive planning will be more important than ever. The NIC and wage changes mean that managing cash flow and costs is going to be a big focus.
If you’re thinking of selling a business or planning for retirement, this Budget brings in some time-sensitive considerations. It’s worth sitting down with us to navigate the changes and make the most of any remaining opportunities – like the current BADR rates – before they disappear.
Navigating the latest Budget will be challenging for many business owners, but with the right planning, businesses can weather the changes and keep moving forward and our team is ready to guide our clients.
