Business Owners: Reflecting on 2024 and what to expect from the New Year

2024 brought with it a number of changes across the geopolitical and economic landscape. Taylor Swift captured the world’s attention with the Eras Tour. The summer Olympics took place in Paris and an Australian breakdancer unwittingly became headline news. Elections took place in many of the world’s major democracies, leading to a number of substantial electoral swings across the political spectrum.

The UK was no different, with a Labour government elected for the first time since 2010. This led to a brief uptick in business sentiment that has since cooled following tax rises implemented by the Labour government, leading to more uncertain times for UK businesses. In this article, we reflect on some of the changes made in the past year and look forward to what business owners might expect for the year ahead.

Reflections on 2024

The most notable changes from the first half of 2024 were the new rules introduced in the Economic Crime and Corporate Transparency Act 2023 (ECCTA). The first set of changes from this Act, which received royal assent in October 2023, came into force on 4 March 2024. The ECCTA introduced sweeping changes that increase the regulatory burden for all directors of UK based companies and corporate entities, and grant Companies House significant new oversight powers.

Introduced to reduce economic crime and the abuse of corporate structures within the UK, the Act has serious potential ramifications for directors who fail to comply, whether intentionally or otherwise. Amongst these changes are new rules around registered offices and email addresses, stronger checks on company names and new powers for Companies House to query and reject information provided. For more information on the changes from the ECCTA, check out our three part series of articles that provide business owners with a digestible breakdown of the changes.

Looking forward to 2025

In one of the first major moves of the new Labour government, Chancellor of the Exchequer Rachel Reeves in her autumn budget announced a decrease of Business Asset Disposal Relief that can be used to offset Capital Gains Tax up to one million pounds on qualifying business or asset disposals.

From the current rate of 10%, the rate payable on the first £1m of a qualifying disposal will increase to 14% on 6 April 2025, followed by a further increase to 18% on 6 April 2026. This means that owner managers looking to sell their businesses in the near future will face an increased tax burden from 6 April 2025.

Whilst this may seem daunting, for those thinking of selling their business, there is still time to exit before this deadline. The corporate team at Clarkslegal are specialists in advising business owners on exiting their business, and we have a strong network of tax and financial advisors who we can work alongside to ensure your exit is structured as efficiently as possible.  Please get in touch should you want more information or to discuss how we may be able to assist you.

Back to the ECCTA, there are still some changes that were proposed as secondary legislation in May that were intended to come into effect before the end of 2024 that are not yet in place. Amongst these is the requirement for directors to verify their identity and increased restrictions on disqualified directors that automatically cease them from holding office. However, as this secondary legislation was proposed by the previous Conservative government and has not yet been implemented, it remains to be seen whether these increased restrictions will eventually become law in line with the other changes introduced by the ECCTA.

If you have any further questions please contact our corporate lawyers.