Labour’s Budget 🇬🇧

Hey there! 👋

Last week, Labour’s Chancellor presented the UK’s budget, which is a yearly statement of the government’s plans for the economy, such as changes to taxation and spending. The government claims this year's budget will “help fix the NHS and rebuild Britain” while keeping taxes manageable for working people.

Let’s dive into some of the changes and how they affect businesses.

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20% Tax for Private Schools 🎓

From January 2025, private schools will no longer have tax breaks and will need to charge 20% VAT on tuition and boarding fees. This has been one of the most significant changes to the education sector’s tax structure in recent years.

As you can imagine, this will have a strong impact on private schools. Private schools will either need to absorb the VAT costs or pass them on to parents by increasing their fees. This could decrease the number of private school students enrolled in the future.

Minimum Wage Increases 💷

The National Living Wage will now increase to £12.21 per hour from April 2025 (a 6.7% increase) for those over 21.

This increases every year, so it’s not a surprise to businesses. However, staff costs will increase for many businesses, especially for those that mainly hire to fill low-wage roles like fast-food restaurants and retail shops.

Increase in Capital Gains Tax 💰

Capital Gains Tax is set to increase, with lower rates going up from 10% to 18% and higher rates from 20% to 24%.

This means businesses and ordinary investors will be paying more tax on their profits when they sell their assets, such as shares. Therefore, investors might think twice before investing in or selling shares. Businesses might also hold onto investments for longer to delay paying the increased tax.

Increase in Employer National Insurance 💼

From April 2025, employers will pay more national insurance - up by 1.2% to 15%. They'll also start paying this tax when employees earn £5,000 a year, down from £9,100. 

Bigger companies will pay more for each employee, which may make them think carefully about hiring new staff. However, small businesses get some protection as they can employ up to four people on minimum wage without paying any employer National Insurance.

More Funding for the NHS 🩺

The government has allocated an extra £25.7 billion to the NHS over the next two years. This is the biggest increase since 2010, excluding the years during COVID-19. This includes £1.5 billion for new surgical hubs, £70 million for cancer treatment equipment, and £2 billion for NHS technology improvements.

For businesses, the investment may open new opportunities in the healthcare sector. Medical technology companies may expect increased demand for their services. For example, those specialising in diagnostic equipment.

🗞 Other news…

Emma Group, the famous mattress company is being taken to court by the CMA 🛏

The CMA launches court action against Emma Group over its aggressive sales practices. This includes countdown timers and high-demand prompts, which may mislead consumers. The CMA first investigated the company in 2022 and was asked to make changes and agree to commitments known as ‘undertakings’. The CMA claims that Emma has failed to do so, which is why they have taken court action.

Disposable vapes are to be banned from June 🌬

The Tobacco and Vapes Bill gives retailers seven months to sell their stock, after which the sale of single-use vapes will be banned. It is estimated that approximately 150 million vapes will be thrown away, which will have a significant impact on the environment.

I hope you enjoyed this article. See you next week! 👋

Written by Chirag Morar