Autumn Budget 2024: Key Takeaways for Businesses and Commercial Property

Autumn Budget 2024: Key Takeaways for Businesses and Commercial Property

Yesterday, Chancellor Rachel Reeves delivered Labour’s highly anticipated Autumn Budget, marking the party’s first budget in over a decade and aiming to tackle the economic challenges facing the UK.

This budget comes with a focus on restoring economic stability, addressing the “£22bn black hole” in finances, and investing in growth sectors that support the nation’s long-term goals.

With tax changes, wage adjustments, and strategic investments across key sectors, the budget outlines several policies that are likely to have a notable impact on UK businesses, particularly within commercial property. Here’s a closer look at the budget highlights and what they could mean for business owners, investors, and commercial property stakeholders in the coming months.

A Budget to Rebuild Britain

Labelled as a Budget to “fix the foundations,” Chancellor Reeves has committed to revitalising critical public services and infrastructure. Day-to-day spending on public services is set to grow by 3.3% on average in real terms from 2023 to 2025, bolstered by an additional £22.6 billion for the NHS and £4 billion for education. Reeves emphasised the need to improve living standards, tackle inefficiencies, and ensure robust investment in roads, rail, schools, and hospitals over the next five years.

Tax Reforms and Business Implications

The Autumn Budget 2024 introduces targeted tax changes designed to raise revenue while supporting working individuals:

  • National Insurance: The Chancellor announced an increase in employer National Insurance contributions from 13.8% to 15%. The threshold will drop from £9,100 to £5,000, which will impact larger businesses significantly. However, to support small businesses, the Employment Allowance will increase to £10,500, benefiting around 865,000 employers who will avoid National Insurance costs next year.
  • Capital Gains Tax (CGT): CGT will rise from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. With the rates now aligned with property-related CGT, property investors and sellers may face greater tax burdens. Business Asset Disposal Relief will remain at 10% for this year but is set to rise in subsequent years.
  • Stamp Duty Land Tax (SDLT): The additional stamp duty surcharge on second homes has increased from 3% to 5%, adding more challenges for those investing in multiple residential or commercial properties.

Significant Investments in Infrastructure and Public Services

A defining feature of this Budget is the government’s pledge to allocate £100 billion to public investment over the next five years. This includes:

Labour’s Stability and Investment Rule

The Chancellor introduced a fiscal framework grounded in two rules to ensure stability while enabling growth:

  1. The Stability Rule: Government borrowing will be used exclusively for investments, not to cover day-to-day costs.
  2. The Investment Rule: Ensures that debt remains on a downward path relative to GDP while enabling sustained investments to modernise infrastructure.

These rules, met two years earlier than expected, aim to secure a stable economic environment and encourage business growth.

Thoughts From BB&J Commercial

Mark Richardson, Partner at BB&J Commercial commented, “There has been a nervousness from businesses, developers and property owners around the budget for several weeks. Now it has finally been revealed there are some big hits to digest, not least NI hikes and wage increases. I fear this additional cost is more likely to deter businesses from growing their workforce, coming as it does at a time when there are additional stresses on smaller businesses such as materials and utility costs. It’s the small businesses that will I think most keenly feel the effects of this.

Stamp duty and CGT increases will have a more direct pronounced effect on property transactions. I suspect investors and developers will be re-running their spreadsheets to look at the effect of this on project profitability. Whether this results in a hit on land and property prices remains to be seen.

On the plus side however at least now we know what is in the budget it gives a degree of much needed certainty, and to an extent gives a platform around which businesses can plan their future activities.”

Conclusion: Implications for the Commercial Property Sector

The Autumn Budget 2024 provides a mixed landscape for the UK’s commercial property sector. Increased taxation on employers and property gains may initially impact profitability, yet the government’s strategic investments in housing, infrastructure, and regional transport should fuel long-term demand.

In Derby, and other key regions, BB&J Commercial is prepared to guide clients through these changes, leveraging local expertise to maximise property value amid shifting market dynamics.

For more information on how the Autumn Budget may affect your business or commercial property investments, reach out to BB&J Commercial or follow us on social media for the latest insights.

Call: 01332 292825

Email: commercial@bbandj.co.uk

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