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The Budget - key insolvency and restructuring takeaways

The Optimise team takes a look at the key insolvency related takeaways from yesterday’s Budget:



Rise in employers’ National Insurance and Minimum Wage

 

Rachel Reeves announced that the amount businesses will pay on their employees' national insurance contributions will increase from 13.8% to 15% from April 2025.

 

She also lowered the current £9,100 threshold employers start paying national insurance on employees' earnings to £5,000, in what she called a "difficult choice" to make.

 

The Chancellor also increased the minimum wage for those aged 21 years and over by 6.7% to £12.21 with effect from April 2025 - with pay for those aged 18 to 20 set to go up by 16.3% to £10 an hour.

 

Leading business groups said the Budget was a "tough" one, with companies already grappling with big increases in employment costs.

 

Covid corruption commissioner

 

Rachel Reeves confirmed that a Covid corruption commissioner will be appointed to examine Covid-related fraud. 

 

The Chancellor said: “That money belongs in our public services, and tax payers want that money back.”

 

The commissioner will work with HMRC, the Serious Fraud Office and the National Crime Agency to examine an estimated £7.6bn worth of fraud. 

 

Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR) changes when closing a solvent limited company

 

An increase in CGT means tax liabilities when liquidating a solvent limited company are subject to increase from April 2025, along with the rate of CGT available under BADR.  

 

CGT rates for Members’ Voluntary Liquidations will rise from 10% to 18% (lower rate) and 18% to 24% (higher rate).

 

BADR rate will increase from 10% to 14% in April 2025, and 18% in April 2026; lifetime cap remains at £1 million.

 

Business Rates

 

The Chancellor confirmed that the 75% discount to business rates which is due to expire in April 2025 will be replaced by a discount of 40% - which applies up to a maximum £110,000 per business. This will see business rate bills for companies almost double.

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