Unpacking the 2024 autumn budget

Karin Simonsen at Vistage UK explains what businesses need to know about the UK Labour government’s budget for growth

 

With the long-awaited Autumn Budget now released, UK Chancellor Rachel Reeves has introduced fiscal measures and support initiatives aimed at reshaping the landscape for small and medium-sized enterprises (SMEs) and corporate leaders.

 

However, Vistage’s Q3 2024 survey revealed that 82% of SME CEOs are concerned about the potential adverse effects of the budget on their businesses, highlighting the economic uncertainty they face.

 

In light of the economic challenges such as an ageing population, rising demands on public services, and the need to drive productivity, it seems the government’s budget aims to balance financial responsibility with strategies for strengthening economic resilience.

 

The budget introduces tax changes, adjustments in business rates, and work-life initiatives that will affect business strategy, workforce planning and bottom lines. Therefore, for senior business leaders and decision-makers, understanding the implications of this budget on costs, talent and operational flexibility is paramount. 

 

Key budget measures affecting businesses

Looking specifically at the pivotal changes that demand strategic focus, key shifts include:

 

Employer’s National Insurance increase

One of the more impactful changes for businesses is the 1.2% increase in Employer’s National Insurance, bringing the rate to 15% as of April 2025. For businesses with considerable payroll expenses, this increase is likely to raise operational costs, potentially requiring adjustments in staffing budgets or cost-cutting measures.

 

However, the government has increased the Employment Allowance to help alleviate this burden, providing some cost relief to smaller enterprises sensitive to payroll changes. Senior decision-makers will need to evaluate how these increased costs might affect hiring plans and overall budget allocations for the coming year.

 

Strategic workforce planning, with a focus on optimising talent utilisation, could help mitigate the added payroll expenses, especially in SMEs that operate with narrow profit margins.

 

Capital Gains Tax increase

The Capital Gains Tax is increasing from 20% to 24%, impacting business owners and investors planning to sell assets or exit investments. This hike, intended to align capital gains with income tax, may cause business leaders, especially SMEs, to reconsider asset sales or capital-raising plans to fund growth.

 

Reduction in business rates relief

Chancellor Rachel Reeves also announced a reduction in business rates relief from 75% to 40%, significantly increasing costs for small businesses. Vistage’s survey showed that only 18% of business leaders feel their organisations will not be affected by the budget.

 

With 39% of CEOs anticipating an impact on sales, the reduction in business rates relief is likely to contribute to an environment of economic uncertainty. As SMEs are crucial to the UK economy, this policy shift could hinder their ability to grow and thrive amidst other financial pressures introduced in the budget.

 

The future of work

There are two key initiatives for workforce management and business growth

 

The “Right to Switch Off” initiative

Designed to support work-life balance, the government’s “Right to Switch Off” initiative aligns with the goals outlined in the Autumn Budget by placing employee wellbeing at the heart of workforce productivity and retention. By reducing stress and improving job satisfaction, the policy aims to lower turnover rates, especially among younger and remote workers. 

 

For senior leaders, the "Right to Switch Off" initiative offers both opportunities and challenges. Vistage found that there were mixed sentiments among business leaders, with 33% supporting the initiative, while 38% expressed concerns about its impact on responsiveness and flexibility, both of which are vital traits for SMEs. Yet, companies that embrace this policy stand to boost employee engagement and retention, making them more competitive in the job market.

 

To implement the "Right to Switch Off" effectively, leaders should adopt strategies that align with the budget’s focus on a supportive work environment. This includes: 

• Investing in time management and communication tools to streamline workflows
• Setting clear after-hours communication policies that respect employee boundaries while maintaining client responsiveness
• Leveraging flexible working hours and automation to meet client demands without overwhelming staff. 

The “Help to Grow” campaign

As businesses navigate regulatory changes, several initiatives have emerged to streamline operations and enhance productivity. In February 2024, the UK government introduced a new and improved “Help to Grow” Campaign, which provides subsidised management and digital skills training aimed at strengthening leadership and operational efficiency.

 

With economic pressures demanding increased productivity, this initiative enables businesses to upskill their teams and prepare for advancements in AI and automation. Research by Vistage revealed that nearly 85% of SME leaders have either implemented or plan to implement AI in their operations.

 

By leveraging tools like the Help to Grow program, organisations can develop a roadmap for effectively incorporating AI and digital tools, ultimately boosting productivity and scalability.

 

Strategic planning for sustainable success

The Budget reflects a balancing act between fiscal responsibility and support for business growth. While increased National Insurance, Capital Gains Tax, and reduced Business Rates Relief introduce financial pressures, initiatives like the “Right to Switch Off” and the “Help to Grow” campaign offer pathways for improving workforce well-being, productivity, and long-term resilience.

 

For senior decision-makers, navigating this new economic landscape requires a blend of flexibility and strategic foresight. Businesses that prioritise workforce well-being, harness government support and embrace innovation will be best positioned to not only withstand these changes, but also to capitalise on the opportunities they present.

 

By aligning with the government’s goals of increased productivity and stability, SMEs and larger corporations alike can aim for increased growth in the evolving UK economy.

 

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Karin Simonsen is Marketing Director at Vistage UK

 

Main image courtesy of iStockPhoto.com and stocknshares