The UK Autumn Budget, announced on 30 October 2024, introduced a range of policies aimed at stimulating the UK economy and addressing challenges that many businesses, including those in the construction sector, currently face. Whether you’re a construction business seeking optimal financial strategies or a Rotherham-based business or individual looking for reliable guidance, insights from expert accountants can be invaluable. This guide provides a breakdown of the most impactful changes from the budget, offering insights to help businesses understand, adapt to, and thrive in the evolving financial landscape.
The Impact of Freezing the Personal Allowance
One significant aspect of the budget is the government’s assertion that there will be no additional tax burden on workers. However, by maintaining a freeze on the personal allowance, both low- and high-income earners will end up paying more tax as wages increase with inflation. This freeze means that as workers’ earnings rise, they may move into higher tax brackets without a corresponding increase in their tax-free allowance, effectively eroding their take-home pay.
This situation creates an unintended consequence, particularly for those in lower income brackets who may be less equipped to absorb the impact of rising taxes. As the cost of living continues to escalate, workers may find themselves financially squeezed despite nominal increases in their wages.
Corporate Tax Stability and Its Impact on Businesses
One of the major announcements in the 2024 Autumn Budget was the decision to keep the corporation tax rate capped at 25% for the duration of the current Parliament. This measure, designed to offer stability, gives businesses across all sectors the opportunity to plan long-term investments without fearing unexpected tax hikes. This reassurance was particularly welcome, as there had been significant concern in the lead-up to the budget that the government might raise the rate even higher, especially given the need to address national debt and meet public spending requirements.
For accountants for construction businesses, this stability is advantageous. Construction firms, especially those managing large-scale, multi-year projects, rely heavily on consistent tax planning to minimise risks associated with fluctuating costs. This cap allows them to strategically allocate resources towards growth, expansion, or necessary upgrades with the confidence that corporation tax rates will remain steady.
While some construction firms may still be eligible for the 19% small-profits rate on profits below £50,000, the best accountants are advising their clients to determine which rate applies and to strategise accordingly. Rotherham accountants, who understand the local market, can offer personalised advice on how these tax caps can benefit project planning, making them a valuable asset for firms looking to ensure financial stability.
National Insurance Rate Increase and Employment Costs
From April 2025, employers will see an increase in the National Insurance (NI) contribution rate from 13.8% to 15%. This change also includes a reduction in the NI threshold from £9,100 to £5,000, which will likely impact sectors with large workforces, including construction, hospitality, and retail.
For construction companies, in particular, this increase translates into higher employment costs, as the industry often relies on substantial labour to complete on-site projects. The best accountants for construction businesses are assessing these changes closely, advising on payroll adjustments and potential hiring strategies that align with each company’s cash flow. In regions like Rotherham, where many businesses operate with narrow profit margins, local accountants are well-placed to help manage these increased NI expenses without compromising operational efficiency or profitability.
However, the government has also announced an increase in the employment allowance, which allows smaller businesses to reduce their National Insurance contributions by up to £10,500, previously £5,000. This increase may help offset the burden of the NI increase, making it easier for smaller employers to manage their staffing costs. Many Rotherham accountants are recommending that construction businesses explore cost-saving measures, such as investing in technology to improve productivity or analysing workforce structures to optimise staffing. By proactively planning around the NI increase, companies can ensure they remain competitive in a challenging labour market.
Capital Gains Tax Changes
Changes to capital gains tax (CGT) are another notable aspect of the 2024 budget, with rates increasing from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers.
Accountants are also advising Rotherham clients on alternative investment structures that may help mitigate CGT impact, such as using limited companies or trusts, and ensuring that tax planning measures are well thought out to ensure maximum reliefs are obtained. Given that asset acquisitions are often long-term investments in, this CGT increase underscores the importance of working with the best accountants to ensure that tax planning aligns with evolving regulations.
Reclassification of Double Cab Pickups and Its Impact on Construction Businesses
One of the unexpected changes in the UK’s 2024 Autumn Budget affects the tax treatment of double cab pickups, a popular choice among construction and trade businesses. On 12 February 2024 HMRC had updated its guidance on double cab pickups which is why this announcement came unexpected. Previously classified as “vans” for tax purposes, many double cab pickups will now be considered “cars.” This reclassification has significant implications for benefit-in-kind (BIK) tax calculations, affecting employees and businesses that rely on these vehicles.
Under the new guidelines, employees using double cab pickups for both personal and work use will face higher BIK rates, increasing their tax liabilities. This shift could result in considerable additional costs for employers who traditionally provided double cab pickups as part of employee compensation packages.
For construction businesses, which often depend on these vehicles for transporting materials and tools to worksites, the new classification may require a review of fleet management strategies. Accountants for construction businesses are already advising clients to assess the tax implications and consider alternatives if cost efficiency is a priority. Some businesses may explore leasing or transitioning to vehicles that maintain their “van” classification, allowing them to keep operating costs under control.
In regions like Rotherham, where construction businesses often rely heavily on double cab pickups, Rotherham accountants can play a crucial role in guiding firms through these adjustments, offering tailored advice on managing vehicle expenses under the updated tax classification.
Research and Development (R&D) Tax Relief Continuation
In a move welcomed by the business community, the government has committed to maintaining the current structure of R&D tax reliefs. For construction businesses involved in innovation—whether through new building techniques, materials, or design processes—this can provide significant financial benefits.
The R&D tax relief scheme allows companies to claim back a portion of their spending on research and development. Accountants with expertise in R&D relief can help construction firms identify qualifying activities, which may include improving energy efficiency, adopting digital construction technologies, or developing innovative materials.
For Rotherham accountants, the R&D tax relief scheme offers a valuable tool to support local construction businesses, helping them recoup part of their investment in innovation. This support is crucial, especially for smaller businesses that may face tighter budgets and limited resources for R&D.
Conclusion: Navigating the 2024 Budget with Expert Accountants
The UK Autumn Budget of 2024 brings both challenges and opportunities for construction businesses and the broader business community. From corporate tax stability and rising National Insurance contributions to full expensing and sustainable initiatives, the budget’s changes are reshaping financial strategies across sectors. Although some of the items from our recent blog post “2024 Budget Wishlist: What Accountants in Rotherham Hope to See” were not announced many Accountants were expecting a higher burden on businesses.
For clients in Rotherham, partnering with the best accountants—especially those experienced in the construction industry—is critical for staying compliant, managing costs, and maximising opportunities for growth. Accountants for construction businesses play an essential role in helping firms adapt to regulatory changes, take advantage of tax reliefs, and navigate the complexities of the new fiscal landscape.
Whether you are a Rotherham-based construction company or an enterprise looking to make the most of new financial opportunities, working with experienced accountants can help you build a solid financial foundation and stay competitive in the evolving business environment.