What the new Labour budget means for small businesses

The 2024 Labour Budget has a double-edged impact on the UK small business community, which raises new costs for many firms whilst giving others fresh growth opportunities and important support. Some of the possible pros and cons are listed below.

Higher Energy Costs:

Though the Energy Profits Levy is targeted at oil and gas companies with larger profits, higher energy prices resulting from this policy may trickle down to small businesses in the form of increased costs. This pressure may be even more sharply felt by smaller businesses who rely on energy intensive operations.

Higher Compliance and Possible Tax Obligations: Capital Gains Taxes and Property Taxes:

Capital Gains Tax, which nearly doubles the tax burden on investments and property tax adjustments by sending a ripple through real estate sectors with policies like the stamp duty surcharge on second homes could hurt small business owners who own properties as an investment, or they plug in from rental income.  Labour’s anti-fraud campaign could make it more expensive for small businesses by targeting benefit and tax fraud.  This is as Tax codes could mean new requirements for businesses to add extra layers of compliance.

Assistance for workforce development:

Welfare-to-Work Programs:

 As part of Labour’s overall strategy to invest in welfare, there is also funding for programs designed to help inactive individuals move back into the workforce. That may expand the applicant pool, particularly in regions struggling for talent.

Growth and Investing to Digitise the UK economy:

As part of the Labour government spending £100 billion on infrastructure projects, digital transformation funds will help small businesses adopt new technologies, e.g. digital payment systems, relationship management software, etc. This will help them stay competitive in a tech-driven market.

Environmental Investments and Green Incentives:

 Labour has spoken a lot about investments in green sectors, and helping small businesses make climate-friendly upgrades could capture the interest of firms that fall into that category. These could be possible incentives to reduce the costs of making upgrades towards sustainability or revenue generation through new green-business activities.

To conclude, the budget contains a mix of items which may raise costs and compliance issues for business but also positive opportunities through infrastructure project funding, workforce initiatives and tax exemption opportunities for smaller businesses.

Navigating the complexities of the 2024 Labour Budget can be challenging for small businesses. At Liburd Gallagher Accountancy, we specialize in helping you understand the financial implications of new tax obligations and compliance requirements. Our expert team can guide you in maximizing growth opportunities, from digital transformation funding to green incentives. Let us handle the numbers, so you can focus on what you do best—growing your business.