UK Autumn Budget 2024: What Changed for Small Company Directors

The Autumn Budget delivered by Chancellor Rachel Reeves on 30 October 2024 contained two significant changes to employer National Insurance that took effect from 6 April 2025: the employer NI rate rose from 13.8% to 15%, and the per-employee threshold at which employer NI begins dropped from £9,100 to £5,000 per year. The Employment Allowance — which offsets employer NI for eligible businesses — simultaneously increased from £5,000 to £10,500.

What this means for a director paying themselves a salary: the typical small company director strategy of paying a salary at or just above the Secondary Threshold to minimise employer NI has shifted. With the threshold now at £5,000, any salary above £5,000 generates employer NI at 15%. Many accountants now suggest a salary of around £5,000 per year (staying below the new threshold entirely) with the remainder taken as dividends. The exact optimal figure depends on your personal tax position, any other income, and whether you have employees — model it with your accountant for your specific situation.

Employment Allowance — does it apply to you? The Employment Allowance increased to £10,500 per year, but a long-standing rule means it does not apply to companies where the sole employee is also the director. If your UK company is just you as director and sole employee, you cannot claim the Employment Allowance. This has not changed. The allowance only benefits companies that employ people other than a sole director.

Corporation Tax: no change in this Budget. CT rates remain at 19% for profits up to £50,000, with marginal relief between £50,000 and £250,000, and 25% above £250,000. The 25% main rate introduced in April 2023 was not altered.

Capital Gains Tax changes: the Budget raised CGT rates on most assets with immediate effect from 30 October 2024. The basic rate on non-residential assets rose from 10% to 18%, and the higher rate from 20% to 24%. Business Asset Disposal Relief (BADR), which applies when selling a qualifying business or company shares, saw its rate rise from 10% to 14% from April 2025, with a further rise to 18% from April 2026. If you plan to sell your UK company, the tax cost is higher than it was and the timing of any exit matters more than it did before.

For non-resident Arab directors: NI changes affect you only if your company pays you a salary. Dividends are not subject to NI. If your company is structured primarily to pay dividends rather than salary, the April 2025 NI changes may have limited practical impact on you. The optimal salary/dividend split should be reviewed with your accountant given the new thresholds.