The following article has been supplied by ARAG.
Seasoned observers of budget announcements won’t have been at all surprised that the new government’s first budget seemed to take more than it gave away.
Regardless of the party in power, budgets tend to track the electoral cycle, with governments typically trying to administer the less palatable fiscal medicine while their mandates are still fresh and saving any treats for the run-up to the next election.
Whenever they occur though, budgets almost always bring a wave of changes for business owners to take on board. Our legal and tax advice helplines inevitably field a host of calls seeking guidance on the implications for different types of business.
While much of the media coverage before and after this budget seems to have focussed on specific changes, like VAT on private school fees and inheritance tax on farming estates, that will only affect a fraction of organisations in relatively small parts of the economy, many more business owners will be focussed on the budget’s broader measures.
Next year, employers will face a 1.2% increase in Class 1 National Insurance contributions, and the threshold for paying these contributions will drop to £5,000. This means more businesses will feel the financial impact. However, smaller firms will get some relief as the NIC Employment Allowance for SMEs will increase from £5,000 to £10,500.
Companies with a larger workforce on lower rates of pay will be used to making the annual increases to minimum wage rates but, with the NIC changes to make too, payroll will be the focus of plenty of attention, next April.
The rates and marginal relief on Corporation Tax may not be changing for the foreseeable future, but hikes to Capital Gains Tax and Business Asset Disposal Relief (BADR) will give some businesses even more to think about.
But budgets are just the tip of a regulatory iceberg when it comes to running a business.
The wider legislative agenda invariably contains bills that, if and when they make it onto the statute book, will demand attention from some or all businesses.
The most significant such legislation currently making its way through Parliament, is the Employment Rights Bill which aims to “Make Work Pay” with measures to curb unscrupulous zero-hours contract and ‘fire and rehire’ practices, as well as extending certain rights to the first day of employment.
The bill isn’t likely to gain Royal Assent until next year and some of its measures may not be implemented until 2026 but, when it does become law, every business that employs people will need to understand its requirements.
Another recent legal change affects almost all employers and is already in force. The new duty to protect workers from sexual harassment became law just before the budget, on October 26th. The Worker Protection (Amendment of Equality Act 2010) Act was passed in 2023 and requires employers to take reasonable steps to prevent workers from being sexually harassed.
Also on the horizon is a Fair Payment Code with new rules on company reporting and a major consultation on tackling late payments, a major problem for SMEs.
There are numerous other pieces of legislation, many of them first introduced by the previous government, that will only affect certain types of business and all at different stages of their passage through parliament.
The Tobacco and Vapes Bill will obviously be of most interest to retailers, whereas landlords will be paying close attention to the Renters’ Rights Bill, that was previously known as the Renters (Reform) Bill.
The Terrorism (Protection of Premises) Bill, otherwise known as Martyn’s Law, is another commitment that the previous government failed to deliver before the election, that will create new responsibilities for companies running large events or premises.
The list goes on and on and will only grow as further plans, proposals and manifesto promises climb up the parliamentary agenda.
While much of the legislation is designed to foster growth and support honest and well-run SMEs, the regulatory burden never seems to get any lighter.
At ARAG, our experience from working with thousands of the UK’s smaller and medium-sized businesses is that they are highly adaptable and, with the right tools and guidance, more than capable of taking legislative change in their stride.
How well the Chancellor has managed the perennial challenge of threading the needle between improving current economic output while investing for growth is for future economists and historians to judge but, like every government before it, the urge to legislate will inevitably generate changes that all businesses will need to watch.
