by Acuaccounts | Nov 27, 2025 | accounting, budget, cash flow, latest news
The Chancellor delivered the Autumn Budget on 26 November 2025, outlining a series of measures designed to stabilise the public finances, stimulate long-term growth and ease pressure on the cost of living. Many of the announcements will directly affect SMEs, company directors and self-employed individuals over the coming years.
The Spring Statement 2026 did not introduce major new tax measures, but confirmed a more cautious economic outlook, with lower growth forecasts and continued cost pressures for businesses.
Many of the previously announced changes are now coming into effect from April 2026 and will directly affect SMEs, company directors and self-employed individuals over the coming years.
Taxes, Pensions and Savings
Income Tax and NIC thresholds
Income Tax and National Insurance thresholds will remain frozen from April 2028 to April 2031. As salaries and profits increase, more income will gradually fall into higher tax bands — an important consideration for directors and sole traders.
Salary sacrifice for pensions
From April 2029, the first £2,000 of annual pension contributions made through salary sacrifice will remain exempt from NICs. Any amount above this will attract standard employer and employee NICs. This change will particularly affect owner-managers using salary and pension planning strategies.
National Living Wage and Minimum Wage
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The National Living Wage (21+) will increase by 4.1% to £12.71 per hour from April 2026.
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The National Minimum Wage (18–20) will rise by 8.5% to £10.85 per hour.
These increases will raise staffing costs for many SMEs, especially in retail, hospitality and care sectors.
Dividend, property and savings income
Tax rates on dividends, property income and savings income will increase by 2 percentage points, impacting many company directors, landlords and investors.
Employee Ownership Trusts (EOTs)
Capital Gains Tax relief on disposals to EOTs will be reduced from 100% to 50%, influencing some long-term exit and succession planning structures.
UK Listings Relief
A three-year stamp duty holiday will apply to new UK stock market listings, designed to encourage domestic investment.
Investment and Skills
Apprenticeships
Training costs for under-25 apprentices in SMEs will be fully funded. This may support recruitment pipelines and reduce skills-training costs for smaller businesses.
Travel, Transport and Vehicles
Fuel duty
The temporary 5p reduction in fuel duty has been extended until August 2026, providing ongoing relief for businesses reliant on vehicles.
Electric vehicles (eVED)
From April 2028:
Sector-Specific Measures
Gambling
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Remote Gaming Duty will increase from 21% to 40% in April 2026.
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Online betting duty will rise from 15% to 25% in April 2027.
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Bingo Duty will be abolished from April 2026.
Manufacturing
Electricity prices for manufacturing businesses will be reduced, with further details to be announced.
Drinks industry
The Soft Drinks Industry Levy will be extended to pre-packaged milk-based drinks containing added sugar from January 2028.
Property and HMRC Enforcement
High Value Council Tax Surcharge
From April 2028, a new levy will apply to high-value residential properties:
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£2,500 per year for homes valued over £2 million
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£7,500 per year for homes valued over £5 million
HMRC enforcement
As reinforced in the Spring Statement 2026, HMRC will be granted enhanced powers to pursue tax avoidance schemes, undertake more targeted compliance checks, and act more quickly against suspected fraud, including holding company directors personally accountable where appropriate.
With increased focus on closing the tax gap, businesses can expect greater scrutiny of reporting and record-keeping in the coming years.
Industry Reaction
Federation of Small Businesses (FSB)
The FSB described the Budget as “tax-raising”, warning that increased dividend taxes and pension-related changes could undermine confidence among small firms.
Institute of Directors (IoD)
The IoD welcomed apprenticeship funding but noted that the Budget does little to improve the UK’s growth outlook and increases the overall tax burden on businesses.
What Does This Mean for SMEs and the Self-Employed?
The Autumn Budget 2025 brings a mix of pressure points and opportunities:
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Higher taxes on dividends and asset-based income will affect many company directors and self-employed individuals.
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Wage increases will raise employment costs across multiple sectors.
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Fuel duty relief and fully funded apprenticeships offer some support in the short term.
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Enhanced HMRC enforcement means compliance and record-keeping will be more important than ever.
The overall impact of the Autumn Budget will differ for every business depending on structure, income mix and growth plans. Early planning can make a significant difference in responding effectively to these changes.
If you would like personalised guidance on how the Autumn Budget and the Spring Statement may affect your business or your personal tax position, we are here to help. Contact us at info@acuaccounts.com or call 0203 907 9027 to discuss how we can support your business and cash-flow.
There are also important changes coming with Making Tax Digital for Income Tax. Read more here.
by Acuaccounts | Nov 19, 2025 | accounting, self assessment, selfemployed, tax
PLEASE NOTE: This article was updated in March 2026 to reflect the latest developments in Making Tax Digital for Income Tax.
From April 2026, a significant change to the UK tax system comes into effect. Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will become mandatory for individuals with £50,000 or more in sole trade or property income. One year later, the threshold will reduce to £30,000, with further expansion expected in subsequent years.
This is not a new tax. It is a digital reporting requirement designed to modernise how income tax is recorded and submitted; reducing errors, simplifying record-keeping, and providing greater visibility over your financial position throughout the year.
This guide explains what is changing, what remains the same, and what you need to do now to ensure a smooth transition.
What MTD for Income Tax Means in Practice
Today, most sole traders maintain their records in a way that suits them, whether through paper records, spreadsheets, or basic bookkeeping tools, before submitting a single annual Self Assessment return each January.
Under Making Tax Digital for Income Tax, this approach changes. From April 2026, individuals above the threshold must keep accounting records digitally and submit quarterly updates to HMRC using compatible software. These updates are summary figures of income and expenses, not full tax returns.
At the end of the tax year, a final digital submission is required to confirm the overall position, replacing the traditional Self Assessment return.
In practice, this means moving from a once-a-year reporting process to a more regular reporting cycle throughout the year.
Importantly, payment deadlines do not change. Tax will still be due on 31 January and, where relevant, 31 July. MTD changes how information is reported, not when tax is paid.
For up-to-date guidance, HMRC provides detailed resources on Making Tax Digital for Income Tax.
Who Must Join, and When
MTD for Income Tax will be introduced in phases, based on your total qualifying income from self-employment and property.
From April 2026
- Sole traders with income over £50,000
- Landlords with income over £50,000
From April 2027
From April 2028 (planned)
Those earning below £20,000 are not currently required to join, although this may change as the system expands.
Businesses below the threshold can choose to adopt MTD voluntarily, which may offer improved financial visibility and more accurate tax forecasting.
What Income Counts Toward the £50,000 Threshold?
One of the most common areas of confusion is how HMRC calculates whether you fall within Making Tax Digital for Income Tax.
The threshold is based on your total gross income from:
- self-employment (sole trader income)
- property income (UK and overseas rental income)
Importantly, this is turnover, not profit.
This means:
- expenses are not deducted when assessing the threshold
- the figure is based on total income before costs
Examples
- A sole trader earning £52,000 in revenue (with £20,000 expenses) must join MTD
- A landlord earning £30,000 rental income and £25,000 from self-employment (total £55,000) must join MTD
- A sole trader earning £28,000 does not need to join in April 2026, but may be required from April 2027
What Does Not Count
The threshold does not include:
- employment income (PAYE salary)
- dividends from a limited company
- savings or investment income
Why This Matters
Many taxpayers assume they fall below the threshold because their profit is lower, but HMRC assesses eligibility based on gross income. This means some businesses may be required to comply earlier than expected.
If you are unsure whether you meet the threshold, AcuAccounts can review your income and confirm when you will need to comply.
Does This Apply to Limited Companies or Company Directors?
Making Tax Digital for Income Tax applies to individuals, not limited companies.
If you operate through a limited company, these rules do not apply to your company’s income or Corporation Tax obligations.
However, whether MTD applies to you personally depends on your sources of income.
MTD for Income Tax applies to personal income, which means:
- Salary paid through PAYE → not included
- Dividends from a limited company → not included
- Corporation Tax → not affected
You may still need to comply if you have:
- self-employment income outside your company
- rental income from property (UK or overseas)
If your combined income from these sources exceeds the threshold, you will need to follow MTD for Income Tax rules — even if you also run a limited company.
Limited companies are already subject to Making Tax Digital for VAT, where applicable. HMRC is also developing Making Tax Digital for Corporation Tax, although no mandatory start date has been confirmed.
Common Misunderstandings About MTD, and the Reality
Since HMRC announced the phased rollout, a number of misconceptions have caused confusion. Below are some of the most common — and what they mean in practice.
“I will have to pay tax four times a year”
You will not. Quarterly updates are for reporting purposes only. Payment deadlines remain unchanged, with tax still due on 31 January and, where applicable, 31 July.
“I can wait until HMRC signs me up”
HMRC will contact taxpayers who fall within the threshold, but it remains your responsibility to prepare and ensure you are compliant. Leaving this until the deadline increases the risk of errors, penalties, and last-minute disruption.
“This will create more work”
For most businesses, the opposite is true. Maintaining digital records throughout the year spreads the workload more evenly, reducing the pressure and uncertainty that typically builds ahead of the January deadline.
“It will be expensive to comply”
While there may be some initial adjustment, many businesses find that digital record-keeping simplifies their processes and reduces time spent on administration. The focus should be on establishing an efficient and sustainable bookkeeping routine.
“It will complicate VAT submissions”
MTD for Income Tax is designed to align with existing digital VAT requirements, not duplicate them. Businesses already using digital VAT systems will find many of the processes familiar.
Why Acting Now Makes a Difference
With April 2026 approaching, businesses that fall within the £50,000 threshold should now be finalising their approach to Making Tax Digital for Income Tax.
The focus at this stage is not preparation, but ensuring your processes are in place and working.
- Review your current record-keeping
Your records should already be maintained digitally in a consistent and structured way. If you are still relying on spreadsheets or manual processes, this should be addressed immediately.
- Ensure your records are up to date
Quarterly reporting requires accurate, up-to-date records. Any backlog should be cleared now to avoid issues when submissions begin.
- Establish a regular bookkeeping routine
MTD requires ongoing record-keeping throughout the year. A monthly or weekly routine will ensure your records remain accurate and ready for submission.
- Confirm how quarterly submissions will be handled
Decide whether you will manage submissions yourself or work with your accountant. This should be agreed in advance to avoid confusion once reporting begins.
- Review your systems and processes
If you use multiple tools or systems, ensure they work together efficiently and support digital record-keeping without manual re-entry.
- Speak to your accountant if you are unsure
If you are not confident that your current setup meets MTD requirements, now is the time to review it. Addressing this before April avoids unnecessary disruption and potential compliance issues.
At this stage, the goal is simple: ensure your records, processes, and responsibilities are clear so that the transition into MTD is smooth and controlled.
How AcuAccounts Can Support Your Transition
AcuAccounts supports sole traders and landlords in moving to Making Tax Digital in a structured and practical way — ensuring compliance without unnecessary complexity.
We work with you to:
- review your current record-keeping and identify what needs to change
- establish a clear and sustainable bookkeeping process
- ensure your records are ready for quarterly reporting
- clarify your obligations and reporting timeline under MTD
To suit different working styles and levels of involvement, we offer three levels of support:
Tier 1 – Compliance Review
Client-led with year-end support
- You maintain your bookkeeping
- You prepare and submit quarterly updates
- We review your records at year end
- We prepare and submit the final end-of-year declaration
This option is suitable for clients who prefer to remain hands-on while ensuring year-end compliance.
Tier 2 – Quarterly Accountant Review
Shared responsibility
- You maintain your bookkeeping
- We review your records quarterly
- We prepare and submit the quarterly updates
- We prepare and submit the final end-of-year declaration
This is typically the most popular option, providing a balance between cost and professional oversight.
Tier 3 – Fully Managed
Complete accountant-led service
- We maintain your bookkeeping
- We prepare and submit all quarterly updates
- We prepare and submit the final end-of-year declaration
This option is ideal for clients who want their compliance fully managed you are confident managing your records or prefer full support, we can structure the process in a way that works for your business
📩 info@acuaccounts.com
📞 0203 907 9027
Prepare early, stay digital, and ensure you are ready for April 2026 without the last-minute pressure.
Also starting on November 18th Identity verification for directors, PSCs and LLPs is now required.
Learn what you must do to stay compliant in our other article here.
by Acuaccounts | Sep 22, 2025 | latest news
With just two months until Companies House identity verification becomes mandatory on 18 November 2025, UK directors, PSCs, and LLP members face a critical compliance deadline. Despite voluntary verification being available since April 2025, many business leaders have yet to act. Here’s everything you need to know to avoid penalties and criminal liability.
The End of Anonymous Directors
The UK government’s drive to increase corporate transparency reaches a pivotal moment on 18 November 2025. From this “Base Date,” identity verification becomes mandatory for all company directors, Persons with Significant Control (PSCs), and LLP members – marking the end of anonymous corporate leadership in the UK.
This isn’t just another administrative requirement. It’s a fundamental shift toward full transparency in UK corporate governance, designed to combat money laundering, corporate fraud, and ensure those controlling companies can be held accountable.
Who Must Verify Their Identity?
Directors of UK Companies
All directors of UK companies must complete identity verification, including:
- Existing directors who must verify by their next confirmation statement filing date
- New directors appointed after the Base Date (must verify before appointment)
- First directors when incorporating new companies
- Directors of overseas companies with UK establishments (different transitional deadlines apply)
Persons with Significant Control (PSCs)
PSCs are individuals who hold or control:
- More than 25% of shares or voting rights
- The right to appoint or remove the majority of directors
- Significant influence or control over the company
PSCs must verify their identity within 14 days of the first day of their birth month after the Base Date.
LLP Members
All members of Limited Liability Partnerships are included in the verification requirements from the Base Date.
Current Exemptions
Corporate directors, corporate PSCs, and corporate LLP members are currently exempt from individual identity verification. However, this exemption is expected to be removed in future phases of the rollout.
Timeline and Critical Deadlines
Already Available (Since 8 April 2025)
Voluntary identity verification opened through:
- GOV.UK One Login
- Authorised Corporate Service Providers (ACSPs)
Start your verification now
18 November 2025: The Base Date
Identity verification becomes mandatory. From this date:
- All new director appointments require prior verification
- All PSC appointments require prior verification
- New company incorporations require verified directors
- Existing individuals must verify according to their specific deadlines
After 18 November 2025
- Companies House filings without verified personal codes will be rejected
- Acting as an unverified director or PSC becomes a criminal offence
- Penalties may include director disqualification and financial sanctions
How to Verify Your Identity
Option 1: GOV.UK One Login (Free)
The government’s digital identity service offers three verification methods depending on your circumstances:
Smartphone App Verification: Quick digital verification using your phone’s camera and security features.
Online Security Questions: Answer questions based on your credit history and public records.
Photo ID + Post Office: Upload photo identification online, then visit a Post Office for in-person verification.
Complete guidance available here
Option 2: Authorised Corporate Service Provider (ACSP)
Professional service providers can complete verification on your behalf, including:
- Registered accountants
- Solicitors
- Company formation agents
- Other professionals registered with Companies House and anti-money laundering supervisory bodies
This option particularly benefits busy executives, those with complex corporate structures, or individuals preferring professional assistance.
Your Personal Code
Once verified, you receive a unique Companies House personal code that:
- Remains valid across all your company roles
- Doesn’t expire unless Companies House specifically requests re-verification
- Must be used for all future filings (confirmation statements, director appointments, incorporations)
Critical Timing for Different Roles
Existing Directors
Your verification deadline depends on your next confirmation statement filing date after 18 November 2025. If your company’s confirmation statement is due in December 2025 or January 2026, you must verify immediately.
Action Required: Check your confirmation statement due date and verify well in advance to avoid filing rejections.
PSCs (Non-Directors)
Your deadline is 14 days from the first day of your birth month after 18 November 2025.
Example: If your birthday is in March, you have until 14 March 2026 to verify.
Multiple Company Roles
If you hold positions across several companies, verify immediately using the earliest applicable deadline. One verification covers all your roles.
New Appointments
After 18 November 2025, you cannot be appointed as a director or PSC without prior identity verification. Plan accordingly for any upcoming appointments.
What Happens If You Don’t Verify?
Immediate Consequences
- Companies House will reject filings lacking verified personal codes
- You cannot file confirmation statements, director appointments, or company incorporations
- Your company faces potential administrative dissolution for failing to file
Criminal Liability
Acting as a director or PSC without required verification becomes a criminal offence, potentially resulting in:
- Director disqualification (preventing you from acting as a director for up to 15 years)
- Financial penalties
- Criminal prosecution in serious cases
Company Implications
- Inability to file statutory returns
- Potential strike-off from the Companies House register
- Complications with banking, contracts, and business operations
Practical Steps to Take Now
1. Verify Immediately
Don’t wait until November. With thousands of directors likely to verify close to the deadline, you risk:
- Technical difficulties with government systems
- Delays in Post Office verification appointments
- Last-minute stress affecting your business operations
Start verification here
2. Check All Your Company Roles
Review every position you hold:
- Directorships across all companies
- PSC positions
- LLP memberships
Compile confirmation statement due dates to understand your earliest deadline.
3. Consider Professional Support
If you’re time-pressed or manage complex corporate structures, ACSPs can handle verification on your behalf. This ensures compliance without diverting your attention from business operations.
At AcuAccounts, we can manage your Companies House identity verification process, handling the technical requirements while you focus on running your business. Our team understands the compliance deadlines and can ensure all your directors and PSCs are verified on time.
4. Update Your Records
Ensure Companies House has your current contact details so you receive important communications about verification requirements and deadlines.
5. Plan for New Appointments
If you’re planning director appointments or company incorporations after November 2025, ensure all relevant individuals verify their identity first.
Technical Considerations
Document Requirements
Prepare acceptable forms of identification:
- Valid UK or EU photocard driving licence
- UK or EU passport
- UK biometric residence permit
- Other government-issued photo ID
Digital Readiness
Ensure you have:
- Access to a smartphone with camera (for app-based verification)
- Stable internet connection
- Updated browser for online verification
- Alternative verification method planned if technical issues arise
Post Office Verification
If using the photo ID + Post Office route:
- Book appointments well in advance (expect high demand near the deadline)
- Bring original documents and printed verification codes
- Allow extra time for potential queues
The Strategic Perspective
This isn’t just compliance – it’s preparation for the future of UK business regulation. Identity verification represents the first phase of broader transparency reforms that will likely expand to cover:
- Corporate PSCs and directors
- More detailed beneficial ownership reporting
- Enhanced due diligence requirements
- Real-time reporting obligations
Companies and directors who adapt quickly to these digital transparency requirements will be better positioned for future regulatory changes and demonstrate commitment to good corporate governance.
Your Next Steps for Companies House Identity Verification
Week 1: Verify your identity immediately using GOV.UK One Login or contact an ACSP
Week 2: Check confirmation statement due dates for all companies where you’re a director
Week 3: Ensure all PSCs in your companies understand their verification deadlines
Week 4: Plan for any new appointments or incorporations requiring verified individuals
The message is clear: identity verification isn’t optional preparation – it’s mandatory compliance that affects your ability to continue as a director or PSC. Act now to secure your position and avoid the criminal liability that begins on 18 November 2025.
Need Help with Identity Verification?
Don’t navigate these compliance changes alone. At AcuAccounts, we help directors and business owners complete their identity verification requirements efficiently and on time. Contact us at info@acuaccounts.com or call 0203 907 9027 to discuss how we can support your compliance needs.
Essential Resources:
This guidance reflects current government requirements as of September 2025. For specific advice regarding your circumstances, consult with professional advisors familiar with Companies House compliance.
by Acuaccounts | Apr 11, 2025 | accounting, budget, latest news, selfemployed, spring statement, tax
What You Need to Know About Chancellor Reeves’ Latest Announcements
Last updated: April 11, 2025
The Spring Statement delivered by Chancellor Rachel Reeves on March 26, 2025, confirms several significant tax and financial changes introduced in the Autumn Budget that will directly impact small businesses and self-employed individuals. As your financial advisors, we have analysed these changes previously announced in the Autumn Budget to help you understand what they mean for your business and finances.
Key Tax and National Insurance Changes at a Glance – as mostly announced in the Autumn Budget
1. Employer’s National Insurance Contributions (NICs) 📈
What’s changing:
- The employer NIC rate will increase from 13.8% to 15% from April 6, 2025
- The earnings threshold will decrease from £9,100 to £5,000
What this means for you: Employers will pay higher NICs on a larger portion of employee earnings. For a single employee earning £30,000 annually, this represents an additional cost of £865.80 per year. For businesses with multiple employees, this increase will significantly impact your bottom line.
Calculation breakdown:
- Current system (until April 5, 2025):
- Taxable earnings: £30,000 – £9,100 = £20,900
- NICs at 13.8% = £2,884.20
- New system (from April 6, 2025):
- Taxable earnings: £30,000 – £5,000 = £25,000
- NICs at 15% = £3,750
- Increase: £865.80 per employee
Our advice: Review your staffing budget immediately and forecast the impact this will have on your business over the next financial year. Consider whether you can offset these costs elsewhere or if you need to adjust your pricing strategy.
2. Employment Allowance Increase 🎯
What’s changing:
- Employment Allowance will increase from £5,000 to £10,500
- The previous upper eligibility threshold of £100,000 will be removed
What this means for you: This is positive news for eligible employers, who can now reduce their annual NIC liability by up to £10,500. With the removal of the £100,000 threshold, more businesses will qualify for this relief.
Important note: Single-director companies without employees remain ineligible.
Example impact: If your total employer NICs amount to £12,000:
- With the new £10,500 Employment Allowance: You’ll only pay £1,500
Our advice: Ensure you’re claiming Employment Allowance if eligible. This could significantly offset the increased NIC costs outlined above.
3. Business Asset Disposal Relief (BADR) Changes 📊
What’s changing:
- BADR Capital Gains Tax rate will increase from 10% to 14% from April 6, 2025
- A further increase to 18% is planned for April 6, 2026
What this means for you: Business owners looking to sell or dispose of qualifying assets will face significantly higher tax liabilities. On a qualifying gain of £100,000, the tax payable will increase from £10,000 to £14,000 (after April 2025) and to £18,000 (after April 2026).
Our advice: If you’re planning to sell your business or dispose of significant assets in the near future, consider accelerating these plans to complete before April 2025 to benefit from the current lower rate.
4. Capital Gains Tax (CGT) Rate Increases 💰
What’s changing: For disposals made on or after October 30, 2024, CGT rates for most assets (excluding residential property) will increase:
- Basic rate taxpayers: From 10% to 18%
- Higher rate taxpayers: From 20% to 24%
What this means for you: This represents a substantial increase in capital gains tax liability. On a gain of £50,000, a basic rate taxpayer would now pay £9,000 instead of £5,000 – an increase of £4,000.
Our advice: Review your investment portfolio and potential disposals with urgency. If you’re considering selling assets, you may want to complete transactions sooner rather than later.
5. Making Tax Digital (MTD) for Income Tax 💻
What’s changing:
- From April 2026: Mandatory for sole traders and landlords with qualifying income over £50,000
What this means for you: If you fall into this category, you’ll need to prepare for quarterly digital tax reporting. This will require MTD-compatible software and potentially new bookkeeping processes.
Our advice: Don’t wait until 2026. Start reviewing your current accounting systems now and consider adopting MTD-compliant software early to avoid disruption when the requirements take effect.
What Business Organisations Are Saying
The business community has expressed mixed reactions to the Spring Statement:
- Federation of Small Businesses (FSB) has expressed concern over the economic outlook, emphasising the need for immediate action to stimulate growth.
- Institute of Directors (IoD) viewed the Chancellor’s approach as a balanced response to fiscal challenges, noting that while the strategy relies more on increasing tax receipts than spending cuts, there are positive aspects such as planning reforms.
Your Spring Statement 2025 Action Plan
Immediate Actions (April-May 2025)
- Recalculate your employer NIC costs using the new rates and thresholds
- Check your Employment Allowance eligibility and ensure you’re claiming the full amount
- Review any planned business or asset disposals in light of the CGT and BADR changes
- Schedule a tax planning session with us to explore specific strategies for your business
Medium-Term Planning (June-December 2025)
- Reforecast your 2025/26 business budget to account for increased employment costs
- Evaluate your business structure to ensure it remains tax-efficient given the changes
- Begin preparations for Making Tax Digital if you’ll be affected by the 2026 implementation
- Consider reviewing your pricing strategy to maintain margins in light of increased costs
Payroll & Employer NICs Checklist
- Recalculate Employer NICs with the new 15% rate and £5,000 threshold
- Adjust staff budgets to reflect increased NIC costs
- Check Employment Allowance eligibility
- Apply for the increased £10,500 Employment Allowance if eligible
Capital Gains & Business Disposal Checklist
- Review business disposal plans (consider completing before April 2025)
- Check CGT exposure on potential asset sales
- Explore tax-efficient investment alternatives where appropriate
Digital Tax Compliance Checklist
- Prepare for Making Tax Digital for Income Tax (MTD ITSA)
- Check if your current software is MTD compatible
- Consider training needs for you or your team on new systems
How We Can Help
At AcuAccounts, we specialise in helping self-employed individuals and small businesses navigate tax changes efficiently. We can:
- Provide a personalised assessment of how these changes will impact your specific business
- Create tax-efficient strategies tailored to your circumstances
- Help you implement and transition to MTD-compliant systems
- Ensure you’re claiming all available allowances and reliefs
Don’t navigate these complex changes alone. Book a consultation with our specialists today to ensure your business is prepared for the changes ahead. Get in touch at info@acuaccounts.com and book a consultation with our team. You can also call us directly on 0203 907 9027.
Visit our contact page at AcuAccounts Contact for more information.
This article provides general information based on the Spring Statement 2025 and should not be considered as specific tax advice. Tax regulations can change, and individual circumstances vary. Always consult with your qualified accountant before making financial decisions.
by Acuaccounts | Nov 5, 2024 | accounting, budget, latest news, selfemployed
In a historic first, Labour Chancellor Rachel Reeves delivered the first autumn budget by a woman and the first Labour budget in 14 years this October. The announcement brings significant changes for small businesses and the self-employed, with a mix of support measures and increased costs coming into effect from April 2025. You can find the full policy paper here.
Key Takeaways for Small Businesses
Employment Allowance Doubles
In a major win for small businesses, the Employment Allowance will double from £5,000 to £10,500 annually, starting in April 2025. This increase will help shield smaller employers from rising employment costs, allowing a small firm to employ four people on the National Living Wage without paying any employer National Insurance Contributions (NICs). Approximately 865,000 small employers will benefit from this change.
Example: Small Business Employment Cost Savings
Consider a small retail shop with four full-time employees on the National Living Wage (£12.21/hour from April 2025):
- Annual salary per employee: £25,397 (based on a 40-hour week)
- Employer NICs per employee without allowance: ~£2,625
- Total employer NICs for four employees: £10,500
- With the new Employment Allowance: £0 payable in NICs
- Total annual savings: £10,500
National Insurance Changes
However, the budget also brings challenges. Employer NICs will rise by 1.2 percentage points to 15% from April 2025. Additionally, the earnings threshold at which employer NICs apply will be lowered from £9,100 to £5,000. This combination could add over £700 to National Insurance costs for each full-time employee on the National Living Wage, and over £800 for those on the average salary (£29,800).
Example: Impact on Medium-Sized Business
For a business with 10 employees on an average salary of £29,800:
- Current NICs per employee (13.8% above £9,100): ~£2,857
- New NICs per employee (15% above £5,000): ~£3,720
- Increase per employee: £863
- Total increased cost for 10 employees: £8,630
- After £10,500 Employment Allowance: Additional net cost of £3,700
National Living Wage Increase
Small businesses will need to prepare for a 6.7% increase in the National Living Wage, rising from £11.44 to £12.21 per hour from April 2025. For 18-20-year-olds, the rate will increase significantly from £8.60 to £10.00 per hour.
Example: Cost Impact for Different Employee Types
For a small business with mixed staffing:
- Full-time experienced employee (40 hours/week):
- Current annual cost at £11.44/hour: £23,795
- New annual cost at £12.21/hour: £25,397
- Annual increase: £1,602
Part-time young staff member (20 hours/week, aged 19):
-
- Current annual cost at £8.60/hour: £8,944
- New annual cost at £10.00/hour: £10,400
- Annual increase: £1,456
Impact on Self-Employed and Company Directors
Single Director Companies
Single directors of limited companies who do not have any other employees face a particular challenge—they will not benefit from the increased Employment Allowance. Those paying themselves through payroll above the new £5,000 threshold will face increased employer NIC costs.
Example: Impact on Company Director For a director taking a salary of £25,000:
- Current employer NICs (13.8% above £9,100): £2,192
- New employer NICs (15% above £5,000): £3,000
- Annual increase in costs: £808
Business Asset Disposal Relief
For entrepreneurs planning to sell their businesses, the Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) will be retained but with gradual rate increases. The tax rate will rise from 10% to 14% in April 2025 and then to 18% in April 2026, though the £1 million lifetime limit remains unchanged.
Autumn Budget 2024: Key Changes for the Self-Employed
While the rise in Corporation Tax to 25% and freeze on personal tax allowance until 2028 will affect some self-employed professionals, significant updates around National Insurance, Capital Gains Tax, and Making Tax Digital (MTD) will impact those earning from diverse sources or planning to grow their businesses. Self-employed individuals may also see a Capital Gains Tax hike from 10% to 18% at the lower rate and the expansion of Making Tax Digital (MTD) for ITSA will mean that by 2027, freelancers with an income of over £20,000 may be required to maintain digital tax records. While fuel duty and certain pension reliefs are unaffected, these changes reflect the government’s approach to tax equity and compliance, affecting financial planning for many self-employed individuals.
Additional Support Measures
Business Rates Relief Small businesses in England will benefit from a freeze on the small business multiplier for 2025/26, cancelling the scheduled inflation-linked increase. Small firms in retail, hospitality, and leisure sectors will receive an additional year of business rates relief.
Infrastructure Investment The Chancellor has pledged over £5 billion in government investment in housebuilding, with specific support promised for small housebuilders. An additional £500 million has been allocated for pothole repairs in England.
The Federation of Small Business (FSB) on the budget
The FSB welcomed the Chancellor’s decision to increase the employment allowance for small businesses from £5,000 to £10,500, calling it a “very welcome move” that will “shield the smallest employers from the jobs tax.” FSB Policy Chair Tina McKenzie said this represents “a pro-jobs prioritisation in a tough Budget.” However, the FSB warned that larger small and medium-sized businesses “will struggle with the rises on employer national insurance on top of the high costs from the Government’s employment law plans.” It cautioned about the potential impact on jobs, wages and prices.
Looking Ahead
The autumn budget signals a clear shift in business policy, with support targeting small businesses rather than large corporations. However, the combined impact of increased employment costs, higher wages, and various tax changes will require careful planning and potentially tough decisions for many small business owners.
Small businesses should:
- Review staffing costs in light of the new NICs and minimum wage requirements.
- Consider whether they can benefit from the increased Employment Allowance.
- Plan for the implementation of these changes before April 2025.
- Assess their business rates position and available reliefs.
- Consider the timing of any planned business sale in light of the changing tax landscape.
While the increased Employment Allowance offers welcome relief for many small businesses, the overall package of measures presents a mixed picture, with rising costs that must be carefully managed over the coming years.
AcuAccounts is committed to helping clients navigate the complexities of tax legislation, pensions, accounting, and more.
Questions about how the autumn budget could impact your small business or self-employment? Get in touch at info@acuaccounts.com and book a consultation with our team. You can also call us directly on 0203 907 9027.
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