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Financial planning for the year ahead is more important than ever following the October 2024 Autumn Budget, says Dave Southby of Dave Southby Financial Planning.

Financial planning in the post-Budget landscape – Dave Southby

Financial planning for the year ahead is more important than ever following the October 2024 Autumn Budget, says Dave Southby of Dave Southby Financial Planning.

With several changes on the horizon, from rising payroll costs to shifts in tax relief, small business owners, as ever, need to adapt to stay on track for sustainable growth.

Here are some things to consider:

Review your payroll and plan for rising costs

From April 2025, employer National Insurance Contributions (NICs) will increase from 13.8 per cent to 15 per cent, and the NIC threshold will drop to £5,000. On top of this, the National Living Wage for those over 21 will rise to £12.21 per hour, meaning wage bills will inevitably grow.

Payroll is one of the biggest costs for any business, so it’s essential to prepare now. Look at your workforce costs and see where these changes will hit hardest. The good news is the Employment Allowance has been increased to £10,500, which can ease the burden for many small businesses.

Check your eligibility for the Employment Allowance and factor this relief into your planning.
Use budgeting tools to forecast payroll costs under the new rates.

Be strategic about Capital Gains Tax

If you’re considering selling business assets, be aware that Capital Gains Tax (CGT) rates increased on the 30th of October. The basic rate CGT is now 18 per cent, and the higher rate is 24 per cent. While Business Asset Disposal Relief remains at 10 per cent, the rate will gradually increase to 14 per cent in April 2025 and 18 per cent in April 2026.

If you’re planning a sale, timing is critical. Acting before April 2025 could mean significant tax savings. Consulting a financial planner or tax adviser is the best way to assess your options and plan accordingly.

If you’re thinking of selling assets, review the potential tax impact of delaying or advancing the sale.

Speak to an expert to explore how these changes will affect your plans.

Think pensions

Although the Chancellor announced pensions will form part of your estate for Inheritance Tax from April 2027, no other changes were introduced. This means you can still contribute up to £60,000 per annum into your pension, and it will be treated as a business expense, saving up to 25 per cent in corporation tax.

Pension contributions are still a fantastic way to extract profit from your business. It’s a great way to build your retirement pot whilst also saving tax today.

Review if you’re accumulating excess revenue in your business and whether this can be contributed into your pension

Speak to a financial planner if you need assistance with setting up a pension scheme for you or your business.

Take advantage of Business Rates Relief

For businesses in retail, hospitality, and leisure, a new permanent 40 per cent business rates discount will replace the temporary 75 per cent relief ending in April 2025. This long-term measure, capped at £110,000 per business, can offer significant savings.

For businesses that rely on physical premises, this is welcome news. Use these savings wisely – whether it’s reinvesting in your premises, improving customer experience, or expanding your offering.

Calculate the new rates for your business and incorporate the savings into your budget.
Consider how you can use this financial breathing space to grow your business.

Explore opportunities for innovation with R&D Relief

The government has maintained current levels of Research and Development (R&D) tax relief to support innovation among UK businesses. For businesses investing in new products, processes, or technology, this is a key area to explore.

If your business is developing something new, don’t overlook R&D relief. It’s not just for tech firms – many small businesses in manufacturing, engineering, and other sectors can benefit.

Review ongoing or planned projects to see if they qualify for R&D relief.

Speak to a specialist to ensure you’re claiming everything you’re entitled to.

Keep an eye on operational costs

While fuel duty remains frozen for another year, helping businesses with logistics and transport, rising wages and broader inflation may still increase operational costs. Staying agile and proactive is key.

Small businesses often have more flexibility than larger firms, so use this to your advantage. Look for efficiencies, streamline processes, and don’t be afraid to embrace technology to manage rising costs.

Audit your expenses to identify areas for savings.

Consider technology and automation to improve efficiency and reduce manual workloads.

The October 2024 Autumn Budget brought with it a mix of new costs and opportunities for small businesses. While rising NICs and wages present challenges, expanded Employment Allowance, business rates relief, and stable R&D support offer valuable tools to offset the impact.

By planning ahead and seeking expert advice where needed, small business owners can not only adapt, but thrive in the year ahead.

Dave set up his financial planning business three years ago as a partner with St. James’s Place and is now growing his team. They work with individuals, families, and business owners across Swindon and North Wiltshire, helping them manage their finances effectively and plan for the future.

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