Autumn Budget 2024

Today, on 30 October 2024, Chancellor Rachel Reeves presented the Autumn Budget, highlighting new tax policies and measures designed to shape the UK’s economic landscape. These updates introduce changes in tax rates, reliefs, and priorities that may directly influence growth strategies, funding access, and operational costs for businesses across sectors, including fintech.

Here are the key policies and changes that may influence the fintech sector:

1. Capital Gains Tax (CGT) rates have been raised to 18% for basic-rate taxpayers and 24% for higher-rate taxpayers, increasing the tax burden on profits from asset sales. This adjustment may encourage investors to hold onto assets for longer periods to defer realising gains, as they seek to manage the timing and impact of these higher rates on their returns.
2. Employer National Insurance (NI) Increase: Employers’ NI contributions will increase by 1.2% to help fund public services, impacting payroll costs and operating budgets for businesses.
3. Employment Allowance Increase: The allowance rises to £10,500, enabling smaller businesses to offset more of their NIC liabilities, reducing tax burdens for eligible employers.
4. Business Asset Disposal Relief: Tax relief on gains from qualifying business asset sales. Changes gradually increase the CGT rate to 14% from the previous 10% rate by 2025. This increase is relatively modest compared to standard capital gains tax rates, which can go as high as 24 meaning the change only, slightly reduces post-sale returns.
5. Corporation Tax: Maintained at a maximum rate of 25%, which offers large businesses stability for long-term planning but also increases tax liabilities, potentially prompting strategies to optimise tax efficiency or invest in areas like R&D that provide relief. For companies with smaller profit margins, rates remain stable. 
6. Business Rates: Continued relief and freezes aim to reduce overhead costs and support industry recovery and growth.
7. R&D Investment: Plans for a new R&D tax credit advisory panel to enhance oversight and ensure that the R&D tax relief system effectively supports genuine innovation. 
8. Investment in HMRC: A significant investment in HMRC with a focus on improving HMRC’s efficiency through technology and streamlined processes to enhance tax collection and compliance, reducing administrative burdens for businesses.

Sarah Kocianski, CEO of FinTech Wales, said: “The Autumn Budget 2024 introduces adjustments that we anticipate will influence the landscape for fintech founders, investors, and startups across the UK. While changes to Capital Gains Tax (CGT) may shape investment strategies, we recognise the resilience and adaptability within the sector and continue to support founders and investors in navigating these evolving conditions.

The ongoing support for R&D and innovation initiatives remains a positive foundation for advancing technological progress. We look forward to collaborating with all stakeholders to help Wales and the UK maintain a strong position in fintech, ensuring that innovation, talent development, and ecosystem growth remain at the forefront.”