Budget 2024 Review – Key Personal and Business Impacts

Chris White • October 30, 2024

Chalk board with word Budget 2024 and a hand holding chalk

he 2024 Budget: How It Impacts Individuals and Businesses

The latest budget has brought some significant changes for both individuals and businesses in the UK, targeting cost-of-living challenges, healthcare funding, and incentives for business growth. Below, we break down the key areas of impact.

For Individuals

1. Cost of Living and Income Boosts
One of the most anticipated changes is the increase in the National Living Wage to £12.21 per hour, adding approximately £1,400 annually to a full-time worker’s income. This increase will support low-wage workers, although businesses, particularly in retail and hospitality, may experience higher operational costs. Additionally, carers now have an increased earnings threshold of over £10,000 annually while retaining Carer’s Allowance, creating more financial stability for those juggling work with caregiving duties.

2. Expanded Household Support
With inflation affecting daily expenses, the government has allocated an additional £1 billion to the Household Support Fund. This funding aims to help low-income families manage essential costs, such as food and energy, reducing financial pressure and potentially lessening reliance on food banks.

3. Pension and Benefit Adjustments
The Triple Lock on state pensions remains, meaning pensioners can expect an approximate 4.1% rise, equivalent to around £470 annually, helping them manage rising costs. The increase in Pension Credit further supports low-income retirees, potentially lowering the demand on public assistance programs.

4. Changes in Property and Asset Taxation
The freeze on inheritance tax thresholds through 2030 and the increased stamp duty surcharge on second homes aim to reduce speculative investments in real estate. These adjustments are expected to ease housing pressures, though they may result in increased rent prices as landlords adjust to higher taxes.

For Businesses

1. Employer National Insurance Increase
Employer National Insurance contributions are set to rise by 1.2%, which may create challenges for businesses, especially those in high-labor sectors. However, small businesses benefit from the increased Employment Allowance, exempting about 865,000 small businesses from NI contributions.

2. Business Rates Relief and Employment Allowance
High-street businesses in retail, hospitality, and leisure will receive a 40% relief on business rates in 2025-26. This is aimed at counteracting inflationary pressures and supporting local economies. For smaller businesses, an increase in the Employment Allowance will help offset payroll costs, offering added stability and flexibility.

3. Investment in Skills and Innovation With funding directed towards the Skills England initiative, businesses in healthcare, technology, and engineering can anticipate a more qualified workforce. Additionally, expanded Research & Development funding, particularly in tech and medical fields, supports growth in innovative sectors, further positioning the UK as a leader in these industries.

4. Infrastructure and Clean Energy Projects Government investments in green energy, carbon capture, and regional transportation improvements promise job creation and operational savings over time. These projects aim to improve logistical efficiencies and environmental sustainability, which could help reduce long-term energy costs for businesses.

OBR’s Budget Assessment

The Office for Budget Responsibility (OBR) has noted the budget's ambitious fiscal expansion, with increased spending and tax adjustments aimed at driving economic growth. While short-term impacts appear positive, the OBR has flagged potential risks if inflationary pressures or unforeseen fiscal demands arise. Notably, the government’s new fiscal rules focus on balancing day-to-day spending while reducing net financial liabilities, though the narrow margin for flexibility may limit responses to unexpected economic challenges.

In summary, this year’s budget aims to address both immediate and long-term needs across income, healthcare, housing, and environmental sectors. While these changes present opportunities, individuals and businesses may want to seek professional guidance to make the most of these adjustments and navigate potential financial shifts effectively.

Need assistance? Contact CW Licensed Bookkeeper & Accountant for a consultation at info@cwabc.co.uk or call 07306 812321.

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Get Ahead of the Curve: Join the MTD for ITSA Testing Phase with CWABC

By Chris White • April 20, 2025

Making Tax Digital for Income Tax is coming. Learn how CWABC can help you join the MTD testing phase, stay compliant, and simplify your taxes—stress-free.

Boost for Side Hustlers: Changes to UK Tax Rules and What They Mean for You

By Chris White • March 17, 2025

Introduction The UK government has announced a major change in tax reporting rules that will benefit thousands of people earning extra income through side hustles. The threshold for filing a Self Assessment tax return is increasing from £1,000 to £3,000, meaning approximately 300,000 taxpayers will no longer need to submit a tax return. This change is designed to reduce administrative burdens and make it easier for individuals to manage their additional income. So, what does this mean for you if you have a side hustle? Let's break it down. Understanding the New Tax Rules Previously, if you earned more than £1,000 from self-employment or side activities, you were required to file a Self Assessment tax return. Under the new rule: Earnings up to £1,000 : No tax is due, and no reporting is necessary, thanks to the existing trading allowance. Earnings between £1,000 and £3,000 : You will owe tax on the amount exceeding £1,000. However, you will no longer need to file a full Self Assessment tax return. Instead, HMRC is introducing a simplified online system for reporting and paying tax. Earnings above £3,000 : A full Self Assessment tax return is still required. This change is part of the government's efforts to modernize HMRC and streamline tax reporting, particularly for people earning small amounts on the side. Who Benefits from This Change? This new threshold primarily benefits individuals with small-scale side hustles, including: Selling goods on platforms like eBay, Vinted, or Depop. Providing freelance services such as graphic design, writing, or tutoring. Working in the gig economy through platforms like Uber or Deliveroo. Renting out personal assets, such as through Airbnb. The government estimates that around 90,000 individuals within this group will owe no tax and therefore will not need to report their earnings at all. For those earning above £1,000 but below £3,000, the new simplified system will make tax payments easier and more efficient. Why the Government is Making This Change The government is aiming to reduce the administrative burden on both taxpayers and HMRC. By eliminating the need for thousands of small earners to file full tax returns, the new policy allows HMRC to focus its resources on higher earners and complex tax cases. Additionally, this move supports the growing gig economy, making it easier for individuals to supplement their income without being bogged down by paperwork. What You Need to Do If you have a side hustle, here’s what you should consider: Review Your Earnings : Determine whether your total income from side activities falls within the new thresholds. Understand Your Tax Liability : If you earn between £1,000 and £3,000, keep track of your income and expenses so you can accurately report your taxable earnings. Stay Updated : HMRC will introduce a new online reporting system for those earning between £1,000 and £3,000. Make sure you understand how to use it once it becomes available. Seek Professional Advice : If you’re unsure about your tax obligations, consulting a licensed bookkeeper or accountant can help ensure compliance and optimize your tax situation. Conclusion The increase in the Self Assessment threshold to £3,000 is great news for side hustlers across the UK. This change will reduce paperwork, simplify tax payments, and make it easier for individuals to earn extra income without the stress of unnecessary filings. However, tax rules can still be complex, and it’s essential to stay informed. If you have any questions or need assistance managing your finances, contact CW Licensed Bookkeeper & Accountant at info@cwabc.co.uk or call 07306 812321 for professional guidance.

Is Your Accounting Software the Right One for You?

By Chris White • February 25, 2025

Choosing the right accounting software is crucial for managing your business finances effectively. The right software can save you time, reduce errors, and provide valuable insights into your financial health. However, with so many options available, how do you know if the one you're using is truly the best fit for your needs? In this blog, we'll explore key signs that indicate whether your accounting software is helping or hindering your business. We'll also provide guidance on what features to look for and when it might be time to switch to a better solution. Signs Your Accounting Software Might Not Be the Right Fit If you’re experiencing any of the following issues, it might be time to reconsider your accounting software: 1. It’s Too Complicated or Too Basic Some software solutions are packed with features that small businesses may never use, making them overwhelming and difficult to navigate. On the other hand, some software may be too simplistic, lacking essential features like invoicing, tax reporting, or payroll. If you find yourself struggling to use the software or needing additional tools to compensate for its shortcomings, it’s a sign that it might not be the right fit. 2. It Doesn’t Integrate with Other Business Tools Your accounting software should work seamlessly with other tools like payment processors, inventory management, and customer relationship management (CRM) software. If you constantly have to enter data manually or use multiple platforms that don’t sync, it can lead to errors and wasted time. 3. Lack of Cloud Access or Mobile Usability In today’s digital world, cloud-based accounting software offers flexibility and accessibility from anywhere. If your software is limited to a desktop version or doesn’t provide a user-friendly mobile app, you might be missing out on efficiency and real-time access to your financial data. 4. Limited Reporting and Insights Good accounting software should provide reports that help you understand your business’s financial health. If your current software lacks detailed reporting features or makes it difficult to generate insights, you may be missing opportunities to make informed business decisions. 5. Poor Customer Support or Frequent Downtime If you frequently encounter technical issues and struggle to get support, this can be frustrating and disruptive. Reliable customer service is essential when dealing with financial matters, so if your software provider isn’t responsive or doesn’t offer adequate support, it may be time to switch. 6. Expensive and Unjustified Costs Many businesses start with affordable accounting software, but over time, hidden fees, additional feature costs, or price increases can make it more expensive than expected. If you're paying for features you don’t use or the cost outweighs the benefits, it’s worth considering a more cost-effective alternative. What Features Should Your Accounting Software Have? If you’re thinking about upgrading your accounting software, look for these essential features: Ease of Use – A user-friendly interface that doesn’t require extensive training. Automation – Features like automated invoicing, expense tracking, and tax calculations can save time. Integration – The ability to sync with your bank, payment gateways, payroll software, and other business tools. Scalability – Software that can grow with your business, allowing for additional users, advanced reporting, and new features as needed. Cloud-Based Access – The flexibility to access your finances from anywhere. Strong Security – Reliable data protection to keep your financial information safe. Affordable Pricing – Transparent pricing with no hidden fees. When Should You Switch Accounting Software? If you find that your current software isn’t meeting your needs, don’t wait too long to make a change. The best time to switch is usually at the end of a financial period (such as the end of the month, quarter, or year) to avoid major disruptions. Before switching, ensure you back up all data and carefully plan the transition. Final Thoughts Your accounting software should be an asset, not a hindrance. If it’s too complex, lacks key features, or is costing more than it’s worth, it might be time to explore other options. The right software will help streamline financial management, reduce errors, and give you better control over your business’s finances. If you need guidance on choosing the right accounting software for your business, feel free to contact CW Licensed Bookkeeper & Accountant at info@cwabc.co.uk or 07306 812321 for expert advice.

Accounting for Ambitious Businesses in Tonbridge & Kent