Budget impact on the Care Home Sector
The Chancellor, Rachel Reeves, delivered her 2024 Autumn Budget speech yesterday, outlining a range of financial measures, which was not a good Budget for care home operators including not making additional provision for social care.
For care home operators, the most significant of the measures are set out below.
Employment
Employer’s National Insurance - Class 1 Employer’s National Insurance is to increase from 13.8% to 15% from 6 April 2025. In addition, the threshold at which National Insurance is payable in respect of an employee reduces from £9,100 to £5,000 per annum. Accordingly, for any employee earning more than £9,100 per annum from 6 April 2025, there will be an additional Employer’s National Insurance cost of £615 per annum in addition to the rate increase for earnings in excess of £9,100 per annum.
National Living Wage – The National Living Wage is to be increased from 6 April 2025 from £11.44
per hour to £12.21 per hour (6.7%). For 18 to 20 year olds, the increase is 16.3% and for
apprentices, 18%.
Capital Gains
For gains not falling within an individual’s basic rate of income tax band, the rate has been increased from 20% to 24%.
The amount of cumulative gains eligible for Business Asset Disposal Relief (BADR) is to remain at
£1m per individual taxpayer, however, the rate of Capital Gains Tax in respect of gains eligible for
BADR will increase from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026, materially
eroding the benefit of such relief.
Inheritance Tax
Typically, Business Property Relief would be available on death in respect of the ownership of a
care home business. With effect from 6 April 2026, only the first £1m of eligible assets will be
available for this relief, with any excess having the rate of relief reduced from 100% to 50%. This
will require more planning in order to mitigate the impact.
Get in touch
How does the Budget affect you personally as well as your Care Business, for more information contact Morris Lane HERE