On 30th October, Chancellor Rachel Reeves presented Labour’s first budget in over a decade, setting out significant measures that will impact UK businesses. From changes to employer National Insurance, to new incentives for green investments, the 2024 Budget introduces policies aimed at economic stability and public sector investment. Here’s what these changes mean for your business and how Apollo Business Finance can support you with these new challenges.
Key Budget Highlights Impacting Businesses
1. Higher Employer National Insurance Contributions (NICs)
Starting April 2025, the rate for employer NICs will increase from 13.8% to 15%. Additionally, the earnings threshold will drop from £9,100 to £5,000 annually, meaning employers will contribute more at lower wage levels.
These changes could significantly impact cash flow for businesses with large workforces. Higher NICs will increase payroll expenses, particularly for labour-intensive industries. Businesses may need to look for cash flow solutions, such as invoice finance, to offset these additional costs and maintain operational stability.
2. Capital Gains Tax Increases
As of 30th October, the main capital gains tax rates have risen. Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) rates will also increase in 2025 and 2026.
These tax hikes on gains could affect businesses planning ownership transitions or restructurings. For companies that depend on investment, the higher tax on asset sales might make external financing more attractive for capital needs, allowing you to avoid tax penalties from liquidating assets.
3. Business Rates Relief for Retail, Hospitality, and Leisure Sectors
Businesses in retail, hospitality, and leisure will benefit from a 40% business rates relief in 2025/26, with a lower multiplier introduced in 2026 for properties below a certain rateable value​.
This relief provides a temporary boost for eligible businesses, helping reduce overheads. Companies in these sectors may use the savings to reinvest or manage cash flow more effectively. Invoice finance can further support businesses by providing liquidity when needed, smoothing out cash flow during seasonal fluctuations or expansion periods.
4. Green Investment Incentives and Infrastructure Spending
The budget outlines expanded incentives for businesses to adopt green technologies and energy-efficient practices. The government is committing £3.6 billion over the next few years to household energy efficiency and heat decarbonisation.
Companies ready to invest in green initiatives can benefit from these incentives. However, the upfront costs of green technology can be substantial. Financing options, such as invoice finance, can help your business take advantage of these incentives without straining cash flow.
5. Fiscal Rules and Borrowing Costs
Labour has introduced two fiscal rules focused on stabilising public finances: balancing the current budget and reducing public sector net financial liabilities (PSNFL) as a share of GDP by 2029/30. Both rules are intended to prevent excessive public borrowing and debt.
While the rules aim for economic stability, they may lead to steadier borrowing rates but tighter access to public funding for businesses. This underscores the importance of alternative financing sources like invoice finance, especially for companies reliant on steady cash flow to meet operational demands.
How Apollo Can Support Your Business
Apollo Business Finance is here to help businesses tackle these challenges with flexible, reliable invoice financing solutions.
1. Manage Payroll with Invoice Finance Amid Rising NICs
The increase in NICs means many businesses will face higher payroll costs. Invoice finance can bridge the cash flow gap, allowing your company to pay wages quickly while waiting for outstanding invoices to be paid. This solution helps you avoid cash shortages due to payroll.
2. Fund Your Investments
With the new green incentives and grants for digital investments, now is the time to invest in sustainability and digitalisation. However, these initiatives require upfront capital, which can strain your cash flow. Apollo’s invoice finance solutions can support your investment needs by providing immediate liquidity, allowing you to adopt sustainable practices without stretching resources.
3. Flexibility for Rate and Tax Changes Across Sectors
The changes to VAT, NICs, and business rates could create cash flow fluctuations, especially in industries facing increased operational costs. Invoice finance allows your business to maintain liquidity and adapt to these tax changes seamlessly, helping you navigate increased obligations without affecting day-to-day operations.
Labour’s 2024 Budget presents a mix of opportunities and challenges for UK businesses. Higher payroll taxes, changes to capital gains, and new green incentives mean cash flow management is more crucial than ever. Apollo Business Finance is committed to supporting your business through these changes, offering solutions that keep your cash flow steady, and your growth plans on track.
Get in touch with us today to see how Apollo Business Finance can help your business navigate these new budgetary changes. Whether it’s managing increased payroll costs, funding sustainable investments, or simply maintaining liquidity, our team is here to ensure you have the cash flow you need to thrive.
