Tax experts at a leading regional independent accountancy firm are expecting a surge of enquiries as businesses and individuals seek to mitigate challenges following the recent Budget.
Helen Coombes, Head of Tax, and Neil Allcroft, Tax Director, at HB&O, which has offices in Coventry and Leamington Spa, and have stressed that changes to National Insurance contributions will be a double hit for many employers.
In her first Budget announcement, Chancellor Rachel Reeves announced that employers’ National Insurance contributions will be increased by 1.2 percentage points, from 13.8% to 15%.
She also revealed the threshold for businesses to start paying national insurance on an employee will be reduced from £9,100 to £5,000 per year from 6 April 2025.
Other key announcements included raising the lower rate of Capital Gains Tax to 18%, with the higher rate rising to 24%, while the rate for business asset disposal relief and investors relief will increase to 14%.
There were also key changes to Inheritance Tax, which is set to impact on succession planning.
Agricultural Property Relief (APR) and Business Property Relief (BPR) will be reformed from April 2026, with the first £1 million of combined agricultural assets remaining free from inheritance tax.
For assets over £1 million the tax will apply with a 50% relief at an effective rate of 20%.
Helen Coombes, Head of Tax at HB&O, said: “The changes announced today to employer National Insurance contributions are set to have a significant impact on the day-to-day costs for businesses, which will almost certainly have a negative impact on their growth.
“We were expecting major changes with Capital Gains Tax and while the initial announcement is not welcome, it could have been worse. The rates have not risen to the point where we expect it will stop people of disposing of assets.
“The increases to the rate of Capital Gains Tax that applies to business asset disposal are set to be staggered, even though it is a 4% increase initially, it will effectively become a 40% increase in tax on the BADR band.
“Fortunately, the good news is that there is still time for businesses to act and we would encourage any businesses concerned by any announcements in the Budget to contact a professional adviser.”
Neil Allcroft, Tax Director at HB&O, added: “For SME micro-businesses, the increase in the employer allowance may mitigate the pressures brought about by the increase in the rate of employer National Insurance contributions and the lowering of the starting points at which Employer’s NI is charged– which will be a double hit for many businesses.
“If a business is floating around the VAT Registration-threshold, for example in the service sectors, they will see their costs increase by virtue of the additional NI cost and increased minimum wage obligations.
“If this cost is passed onto customers, the resultant increase in gross turnover could exceed the VAT registration threshold, resulting in them being less competitive. The lowering of the NI threshold alone could be a cost of up to £600 per employee.
“With the reduction in business rates relief from 75% to 40% for bars, restaurants and other high street outlets, this signals a real increase in business rates costs for businesses within that sector of 140%.
“Changes to inheritance tax will without doubt have an impact on succession planning and family businesses, particularly the changes to Agricultural Property Relief and Business Property Relief from April 2026. Previously all trading and farming businesses were exempt, but any gifts from today will become potentially taxable if the donor dies after April 2026.
“It was also announced that undrawn pension funds will be brought into the chargeable estate.
“Consultation is now underway as to how this additional tax will be measured and paid but it could be a significant tax charge on deceased estates where no tax charge would have existed previously as the value of the undrawn pension fund will now be incorporated into the chargeable estate.”
Those seeking guidance and support following the measures announced in the Budget can contact experts at HB&O by emailing contactus@hbolt.co.uk or visiting www.hboltd.co.uk.