Autumn Budget 2024

Autumn Budget Summary 2024
RCK’s Budget summary 2024 related to our specialisms: Business Rates, R&D tax credits, Capital Allowances, and Land Remediation Relief.  

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Introduction:  
Today, Chancellor Rachel Reeves presented the highly anticipated Autumn Budget, marking the first Labour Budget in 14 years and a historic moment as Reeves became the first woman to deliver a Budget, as the UK’s first female Chancellor. 

The government’s Budget focused heavily on increasing productivity, a topic Lord Hammond discussed at our Budget Forward Look event in Edinburgh, which took place last month.   

There were some popular measures, including no income tax increases, cheaper pints, an increase in the national living wage, and sustained fuel duty freezes. As imagined, cutting draught duty by 1.7%, was met with a very English reaction of a cheer from the crowd of MPs in Parliament. The government committed to maintaining current income tax rates, national insurance contributions, and VAT levels. However, tax thresholds for income tax and National Insurance contributions will rise with inflation from April 2028.

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Summary:
As expected, R&D tax relief rates were unchanged, remaining aligned with the rates implemented from April 2024. Regarding Capital Allowances, full expensing and annual investment allowance (AIA) have been maintained without amendment. For Business Rates, there has been a softening in the exceptions on retail, hospitality, and leisure (RHL) relief and the change of status to the relief available for private schools. Land Remediation Relief discussed no current changes, but Reeve’s gave notice of a pending scheme review.  

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Key Service Line Highlights: Service lines include (1) Business Rates, (2) R&D tax credits, (3) Capital Allowances, (4) and Land Remediation Relief.  

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(1) Business Rates:
Reeves announced new measures on Business Rates targeted to RLH businesses, as well as removing the charitable Business Rates status for private schools.  

Retail, Leisure and Hospitality

• Eligible businesses within RHL will receive a 40% business rates relief for 2025-26
• A cash cap of £110,000 per business for relief will apply, and the small business multiplier will be frozen at 49.9p, with the standard multiplier increased to 55.5p
• From 2026-27, permanently lower multipliers for these sectors are anticipated, funded by a higher multiplier for properties with rateable values above £500,000
• A discussion paper has been published setting the direction of travel for transforming the business rates system and inviting industry to a dialogue about future reforms
• The Valuation Office Agency (VOA) is publishing a response to the March 2023  Consultation on Disclosure, which sets out the next steps in increasing the transparency of business rates valuations by disclosing more information.  

Private schools

• Citing that 94% of children attend state schools, the Chancellor eliminated charitable rate relief on private schools, effective April 2025, pending parliamentary approval.  

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Bradley Westlake, Head of Business Rates at RCK Partners, said

“The Chancellor’s announcement today in relation to Business Rates is likely to get a mixed reception from the retail, hospitality& leisure sectors. They will be relieved that the new 40% relief rate will spare them from a large increase in Business Rates, yet at the same time, they will be disappointed that this is substantially less than the existing 75% rate of relief they have been receiving. The announcement of permanently lower Business Rates for the sectors from the 2026/2027 tax year is welcome – but the devil will be in the detail as to what those rates are.”

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(2) R&D Tax Credits:

The Autumn Budget only referenced R&D briefly, with no changes to the scheme following a turbulent few years of legislative changes. However, innovation commitments were outlined:  

• Labour has pledged to boost capital investment by over £100 billion in the next 5 years, including R&D transport and housing
• The government has also committed to discussing widening the use of advance clearances in R&D reliefs with stakeholders, with the intention to consult on lead options in spring 2025. The aim of this is to reduce error and fraud, improve the customer experience, and provide certainty to businesses
• £20.4 billion government investment in R&D for 2025-26, supporting the Horizon Association for global research collaboration
• Innovation support has been pledged to specific sectors:

· Aerospace: £975million in R&D funding over five years.

· Automotive: Over £2billion, over 5 years, for zero-emission vehicle production and advanced technology, giving the industry the long-term certainty it needs to invest in greener technologies.

· Life Sciences: An investment of up to £520 million, towards the Life Sciences Innovative Manufacturing Fund.

· Defence and Advanced Manufacturing: £25 billion allocated to UK industry within a £56.9 billion defence budget for 24/25, to support advanced manufacturing in aircraft, radars, submarines, and other key industrial capabilities

· Clean Energy: £3.9billion in funding for Carbon Capture, Usage, and Storage, and contracts with hydrogen producers.

(3) Capital Allowances:  

• Extensions through to March 2026 for 100% First Year Allowances (FYA) for qualifying zero-emission cars, plant, or machinery used for electric vehicle charging.
• The government is considering extending full expensing to assets acquired for leasing or hiring when fiscal conditions allow.
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(4) Land Remediation Relief:

• The government will launch a consultation in spring 2025 to review the effectiveness of Land Remediation Relief, to consider whether the relief is still meeting its objectives and is good value for money.
• If this scheme may be applicable, it is suggested to seek specialist advice, to ascertain your business’s eligibility in advance of potential scheme changes.
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Other notable points from the Budget:  

• Reeves announced that employer’s National Insurance contributions will rise from 13.8% to 15% (+1.2%).  In addition, the threshold at which businesses start paying National Insurance, on an  employee’s earnings, will be lowered from £9,100 to £5,000.
• To protect SMEs, Reeves is increasing the employment allowance from £5,000 to £10,500, which the Chancellor says will mean 865,000 employers will not  pay any National Insurance at all next year, adding that over one million  will pay the same or less as they did previously 
• To counteract the rise in employers' national insurance, costs related to salaries that are part of qualifying R&D projects are eligible for R&D tax relief. This allows qualifying companies to reclaim a portion of these additional costs.

If you have any queries regarding any of our service lines please do not hesitate to get in touch to discuss your specific circumstances with our tax specialists.

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