On October 30 2024, Chancellor Rachel Reeves announced the first labour budget in 14 years. In this article, we explore the changes that are most likely to have an effect on ecommerce business owners.

Summary of UK Budget Changes

• Increase in Capital Gains Tax (CGT) effective immediately from 30th Oct 2024
• Business Asset Disposal Relief (BADR) not immediately impacted but will increase over next two years
• Large increase in Employers National Insurance (Er NIC) from 6th April 2025
• Stamp Duty Land Tax (SDLT) surcharge (Stamp Duty on second home) increased from 3% to 5%
• Personal tax rates and allowances on income will continue to be frozen at the current levels
• No changes to income tax reliefs on pension schemes

Labour Capital Gains Tax Changes

Capital Gains Tax (CGT) is a tax that individuals pay upon the sale of assets. It typically applies to sales of shares, cryptocurrency and property, although it’s worth noting that the rules on property sales are slightly more complex and property gains are taxed at a different CGT rates to other assets. For the sale of most assets, the tax on capital gains is as follows:

• The basic rate of CGT was 10% but this is now rising to 18%
• The higher rate of CGT was 20% but this is now rising to 24%

The increases are coming into immediate effect from 30th Oct 2024.

The rate of CGT that someone pays is dependent on their total income and the bands are aligned with the income tax bands. So if you’re a 40% tax payer and you make a gain that is subject to CGT then you will typically pay CGT at the higher rate of CGT.

This change will impact any ecommerce entrepreneurs who are planning on selling their business. For example, if you were going to sell your business for £500,000 and you were a higher rate tax payer, then your CGT bill could have been £100,000, whereas after these changes this has increased by 20% to £120,000.

The capital gains tax-free allowance is an annual exempt amount which you won’t pay any CGT on. The capital gains tax allowance 2025/26 appears unchanged at:

• £3,000
• £1,500 for trusts

Learn more about Capital Gains Tax on the HMRC website.

Business Asset Disposal Relief

Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs Relief, allows a business owner to sell their business and pay 10% CGT up to a maximum lifetime allowance of £1,000,000.

Using the previous example, if a business owner sold their business for £500,000 and the gain was subject to BADR, then the tax bill would be £50,000.

The maximum lifetime allowance has been unchanged in this budget, however, from 6th April 2025 the rate of BADR will increase from 10% to 14% and from 6th April 2026 this will further increase to 18%.

Learn more about Business Asset Disposal Relief and eligibility on the HMRC website.

Employer National Insurance Contribution Rates

There are two significant increases to Employers National Insurance Contributions (ERs NICs) that are planned to start from 6th April 2025.

First, the Secondary Threshold - the level of pay above which ERs NICs apply - is being reduced from £9,100 to £5,000. 

Second, the rate that ERs NIC is charged will be increasing from 13.8% to 15%.

This means that for any employee earning more than £9,100 an employer will now have an additional £4,000 of their salary that is subject to ERcs NICs, meaning each employee above this threshold will cost an employer at least £600 extra per year.

Employment Allowance

Employment Allowance (EA) is an allowance available to most small employers that allows them to offset a portion of their ERs NICs. Currently, the EA is £5,000, as per the HMRC website, however from 6th April 2025 the EA is increasing to £10,500.

This means that employers with fewer than 9 employees will be relatively shielded from the ER NIC increase.

Stamp Duty on Second Home

Where an individual is purchasing an additional property, or, where a limited company is purchasing any property, a stamp duty surcharge is applied. Previously the Stamp Duty Land Tax (SDLT) surcharge was an additional 3% due on completion of the transaction, however, from 31st Oct 2024 this surcharge has been increased by a further 2% to 5%.

Learn more about SDLT on the HMRC website.

Tax Rates and Allowances

There have been no increases or changes to income tax rates and allowances, however, it has been confirmed that these will continue to be frozen until the end of the 2027/28 tax year. If this happens it will mean that personal allowances and tax bands will have been unchanged from 6th April 2022 to 5th April 2028.

Pension Contributions

Ahead of the budget it was heavily rumoured that there would be significant changes to the reliefs available to pensions contributions and/or the tax free lump sum that can be withdrawn upon retirement.

However, there have been no changes to pensions in this budget in relation to these.

When Do Budget Changes Take Effect

In terms of the October 2024 UK Budget, the changes come into effect as follows:

• Increase in Capital Gains Tax (CGT) - immediately, from 30th Oct 2024
• Increase in the rate of Business Asset Disposal Relief (BADR) - from 6th April 2025 and from 6th April 2026
• Increase in Employers National Insurance (Er NIC) - from 6th April 2025
• Increase in Stamp Duty Land Tax (SDLT) surcharge -  immediately, from 30th Oct 2024
• Increase in Employment Allowance - from 6th April 2025

That concludes our 2024 UK budget summary for ecommerce business owners. If you’re a client and unsure of how any of the changes may impact you, please reach out to us. If you wish to become a client, please get in touch with us today to see how we can help.