The Autumn Budget on 30 October 2024 was the first Labour Budget in 14 years and the first ever to be delivered by a female Chancellor.

Gus Williams, interim CEO at Chambers Wales South East, South West and Mid, said:

“This was always going to be a difficult budget – there’s a reason that the previous government went to the polls in July rather than wait until November.  The headlines are going to be the £40bn increase in taxes, which as much as we might complain was inevitable given pressures caused by demographics – an ageing population – increasing numbers of people not participating in the workforce, and the need for long term public investment.

“There is a lot to take in, the approach has been to try and spread the additional tax burden as widely as possible without touching income tax or VAT, focusing on those taxes that provide most certainty that the rises will increase the tax take in the short-term. This means changes to Employers NI, inheritance tax, agricultural and business disposal relief, Capital Gains Tax, second home stamp duty, abolition of the non-dom regime, air passenger duty, tax on vapes, VAT on private schools.

“Let’s start with the parts which sound sensible.  Freezes on small business rates and reductions for the hospitality and leisure sectors, something the Chambers of Commerce lobbied hard for, are welcome.  The infrastructure investment plans appear sensible, well thought out and achievable rather than just aspirational.  Reforming the carers allowance rules corrects what always felt a bit egregious for those caring for people with serious needs.  The reduction in draft alcohol duty, very much a theatrical play, is welcome news for pubs.

“Changes to Employer NI, just increasing the rate to 15% and reducing the threshold from £9,000 to £5,000 rather than including pension contributions means a slightly lower rise in Employers NI than had been flagged, and makes sense as it retains the pension contribution incentive, but will be a burden to businesses, particularly in some sectors where wages are at the lower end and where staffing costs are a high proportion of overall costs.

“Some will be upset about the increases in Capital Gains, but it is worth noting that the rises in CGT broadly take us back to where they used to be. There are various exemptions and rules which we will need to look into before providing a a full assessment.

“Changes to inheritance tax for agricultural and business property will impact succession and tax planning for a number of small business owners, and it is important that all small business owners make sure they have a succession or exit plan in place.  Executing a successful succession or plan for your business should always start at least three years prior to your planned exit date and the sooner you start planning the better.  These tax changes make that planning even more important.

“The increase in the National Minimum Wage and increases to Employers NI will undoubtedly squeeze small business margins, and small business will want to see evidence of government investment and other initiatives growing the economy and increasing opportunities to counter this squeeze on margins or the cost pressure on small business could have consequences on hiring and investment.

“There is a bit of a hole in the budget, a proposed clamp down on tax avoidance and benefit fraud is forecast to bring in £9bn and whether the government can actually hit those targets is an open question.

“The sleight of hand in all this is that a lot was made of personal allowances increasing in 2028 – it’s currently 2024.  The ongoing freeze in personal allowances until 2028 combined with the national minimum wage increases will push more tax revenues into the treasury, and this is probably where a significant chunk of the additional tax take will over the course of this parliament will actually come from.

“The response to this budget will probably be ideological, but viewed objectively, yes the burden appears to be falling on business and those who make capital gains, but that was always going to be the case with the promise not to increase income tax or VAT.  The real test will be whether the government can deliver efficiently on its investment plans, makes the right decisions on capital spending, can deliver genuine reform to the planning system, and can tackle the impact of those not working and particularly not working due to long term sickness. My conclusion – it wasn’t a bad performance by Rachel Reeves and I’m willing to give the government the benefit of the doubt while we wait for them to tackle those bigger issues.”

Shevaun Haviland, Director General of the BCC, said:

“This is a tough budget for business to swallow but the Chancellor has looked to ease the pain by holding out a promise of better days ahead.

“While some protection for smaller firms is welcome, the increase in employer National Insurance Contributions will place a further cost burden on business. This, coupled with a 6.7% increase in the National Living Wage, means many firms will find it more challenging to invest and recruit in the short-term.

“But the Chancellor has looked to off-set the upfront hit on firms by outlining a longer-term framework to provide stability for the economy.

“Plans to raise infrastructure spending, sector-specific business rates relief and additional support for small business will take some of the sting out of the tax rises. And it is encouraging to see full expensing and the annual investment allowance made permanent alongside R&D relief being retained.

“The Chancellor has also listened to our request to retain first year allowances for investments in the North Sea to help provide a just transition to Net Zero.

“Much now rests on the Government’s next steps, with the future benefits outlined by the Chancellor by no means guaranteed. A lot will be riding on the success of the Industrial and Trade strategies, and the effectiveness of devolution and public investment in infrastructure to reinvigorate regional supply chains.

“To build business confidence, it’s crucial that we now see decisive and inclusive action at pace from the Government to unlock the investment the economy sorely needs.”