Gemma Hedges, Director at Hampshire-based HWB Chartered Accountants says there were few surprises in Chancellor Rachel Reeves’ first Budget which sets out a decade of national renewal.

“We saw this coming and that it was expected that we would need to pay more tax to make much needed improvements to public services, however, employers will feel it more than others with the double whammy of salary increases and a hike in employers’ NIC."

“The national living wage for over-21s goes up 6.7% from £11.44 to £12.21 per hour from April 2025 with an increase in the national minimum wage from £8.60 to £10 per hour for 18 to 20-year-olds, with some businesses already warning it could hit job creation."

“Businesses will be also less enthusiastic about the headline rate of national insurance for employers being increased from 13.8% to 15% from April next year. Also, the earnings threshold at which employers start making national insurance contributions has been lowered to £5,000 from £9,100, bringing more of their employees within the scope."

“There was still good news for businesses though in the shape of Corporation Tax rates and Annual Investment Allowances remaining unchanged as part of the Government’s Corporate Tax roadmap. We also welcome a 40 per cent business rates relief for retail, hospitality and leisure business, capped at up to £110,000 per business for next year and 2026."

“Whilst there has been a significant increase in HMRC enquiries into Research & Development claims recently, the Chancellor made clear that this relief is staying and is fully supported, which is welcomed where the relief is vital to so many businesses."

“It was no surprise to see that the Government support is only for valid claims. In line with her predecessor, the Chancellor has continued the attack on those seeking to abuse the system, whether through fraudulent welfare or covid claims."

“There is also again more investment into finding the ‘missing tax’ the Government perceive as lost, this time through umbrella companies, close company loans and car schemes."

“Capital Gains Tax (CGT) increases were highly anticipated, but significantly lower than could have been expected, with the lower rate increasing to 18% and the main rate to 24%, in line with the current rates for UK residential property disposals."

“Many will be delighted to see that despite significant speculation to the contrary, Business Asset Disposal Relief (BADR) is staying, although this will increase to align eventually to the new lower CGT rate, so for people selling businesses this rises to 14% from April 2025 and 18% from April 2026.”

“Inheritance tax (IHT) was another widely anticipated area of reform, but the Chancellor surprised everyone by extending the freeze on the nil rate and residence nil rate bands until 2030. Although on the face of it not increasing the tax, by bringing pensions within the IHT regime from 2027, the reality is that more estates will exceed the £2 million threshold whereby assets are actually taxed at an effective 60% rate of IHT.

“A further blow to business owners has been the restriction of 100% business property relief (100% protection from IHT) to only the first £1 million of qualifying agricultural and business assets, the excess only qualifying for relief at 50%. For many businesses this will simply not be enough to allow them to pass the mantle to the next generation, who will likely now need to sell the farm or the business in order to pay the IHT bill.

“Landlords, who have faced significant attacks in previous budgets did not escape unscathed this time either, with Stamp Duty Land Tax surcharges on second homes increasing from 3% to 5% from tomorrow.”

Gemma added; “For individuals, the good news comes in the national minimum wage rises, the fuel duty freeze and of course for all of us, the spend on public services. I’m looking forward to someone answering the phone at HMRC and one million less potholes on our roads each year.”