Navigating the 2025 Budget: What It Means for Small Businesses in the North West

The UK government’s 2025 Budget, led by Chancellor Rachel Reeves, introduces several significant tax changes that will impact small businesses and owner-managed companies across the North West. While some measures aim to support businesses, others may present challenges.

Increased Employer National Insurance Contributions

Starting from April 6, 2025, employer National Insurance contributions will rise from 13.8% to 15%. Additionally, the threshold at which employers start paying National Insurance will decrease from £9,100 to £5,000 per employee. To alleviate the burden on smaller employers, the Employment Allowance will increase from £5,000 to £10,500, and the £100,000 cap on eligibility will be removed. This means more businesses can benefit from reduced National Insurance liabilities, potentially saving up to £5,000 annually .

Changes to Capital Gains Tax and Business Asset Disposal Relief

The Budget also announced increases in Capital Gains Tax (CGT) rates. The lower rate will rise from 10% to 18%, and the higher rate from 20% to 24%. For Business Asset Disposal Relief (BADR), the rate will increase from 10% to 14% in April 2025 and to 18% in April 2026. These changes could affect business owners planning to sell assets or retire, as the tax liability on gains will be higher .

Impact on the Hospitality and Retail Sectors

Businesses in the hospitality and retail sectors may face additional challenges. Business rates relief for these industries will decrease from 75% to 40%, capped at £11,000 per business. This reduction could lead to higher operational costs for establishments such as restaurants, cafes, and shops, potentially affecting profitability .

Looking Ahead

As these changes take effect, it’s crucial for small business owners in the North West to review their financial strategies. Consulting with a professional accountant can provide tailored advice to navigate these adjustments effectively. At McKendrey Accountants LTD, we offer expert financial guidance to help local businesses adapt to these changes and continue to thrive.