The Autumn Budget has been announced, and founders across the UK are trying to make sense of what it means for their businesses. While there are some positives, like investment incentives and immediate tax deductions, the budget also brings new challenges, like increased NIC rates and higher CGT.
In this post, we’ll dive into the key takeaways for founders and explore how these changes
will impact your businesses.
Investment Incentives Retained: The extension of SEIS, EIS, and Venture Capital Trust (VCT) to 2035 will continue to attract investors, providing a favourable environment for startups seeking early-stage funding.
Full Expensing Retained: This policy will allow founders to deduct qualifying investments, encouraging capital reinvestment and growth.
Increased Employment Allowance: Doubling the allowance will lower NIC costs, especially for SMEs with staff, providing some relief to startup budgets.
This is great news for startups and founders alike.
Now, let's dive into the challenges:
Increased NIC Rate and Lower Threshold: The higher rate and lower threshold mean founders will face higher payroll costs, potentially impacting their operating budgets and forcing them to rethink staffing costs.
Higher CGT Rates: Founders will face higher taxes when exiting their business or selling shares, which could make equity more costly to cash in and slightly reduce the appeal of exits.
Higher Minimum Wage: The rise in NMW and London Living Wage will increase payroll expenses, which could be challenging for labour-intensive startups or those in early growth stages with tight budgets.
In summary, while there are certainly some benefits for founders in the Autumn Budget 2024, some challenges must be navigated carefully. Here are a few key takeaways:
Startups with plans to scale or attract investors will benefit from the budget, but those relying on large staff teams or planning exits may face additional financial pressures.
Each startup’s growth stage and resource allocation will play a significant role in determining the overall impact of the budget.
For a deeper insight, visit the article by our partners, SeedLegals, here:
Or check out the official publication of the UK's Autumn Budget 2024 here:
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