2024 outlook: Strategic planning for a prosperous year ahead

As we welcome the new year, we want to extend our warmest wishes for a prosperous and successful 2024. At this time of year, when many are making resolutions, we encourage you to consider taking steps to manage your business and financial affairs and plan for the future.

In this blog, we aim to distil essential information and insights, helping you navigate the year with confidence.

Economic trends and business implications

As we move through 2024, the UK economy confronts a mix of persistent challenges and cautious optimism. Understanding these dynamics is crucial for strategic business planning.

Inflation dynamics: Inflation has shown signs of retreat, falling from over 10% in early 2023 to 3.9% by November. This decrease is primarily attributed to cooling energy prices. However, inflation rates remain stubbornly above the target, with the UK grappling with the highest rate in the G7. The expectation for 2024 is a continued, albeit slow, decrease in inflation, but it is forecasted to stay above the target until the end of 2025. This scenario suggests that prices will continue to rise, albeit at a slower pace, exerting ongoing pressure on households.

Interest rate outlook: Financial markets anticipate that the Bank of England may start reducing interest rates from the current level of 5.25% as early as summer 2024. This change is in response to cooling inflation and weak economic growth, mirroring trends in other advanced economies.

GDP growth and economic activity: The UK's economic activity has been sluggish, with GDP contracting in recent months and pressure mounting from higher living costs. While a 50-50 chance of a recession looms according to The Bank of England, predicting zero growth for 2024. This outlook is slightly more optimistic with the Office for Budget Responsibility's forecast, which projects growth of 0.7% for 2024.

Labour market and unemployment: The UK's labour market remains resilient with low unemployment levels, despite economic pressures. However, a rise in unemployment is anticipated over 2024, with forecasts predicting it to peak at 4.6% by the second quarter of 2025. This increase is attributed to weaker activity and higher borrowing costs impacting hiring intentions. The expected cooling of inflation and hiring demand may also lead to a reduction in average annual pay growth.

Tax efficiency and key changes

Focus on optimising your tax position by understanding the tax updates for 2024:

  • National Insurance Contributions (NIC): From 6 January 2024, the main rate of NIC paid by employees has been reduced from 12% to 10%
  • Pension strategy: Leverage unused pension allowances from previous years and adapt to the abolishment of the pensions Lifetime Allowance.
  • Basis period reforms implementation: A major shift is set to occur for self-employed individuals and partnerships with the introduction of the basis period reforms. Under this new system, taxation will be based on the profits earned within the tax year itself, rather than on the profits of an accounting period end.
  • Changes in Capital Gains Tax allowance: Starting April 2024, there will be a significant adjustment in the Capital Gains Tax allowance. For individual taxpayers, the allowance will be decreased to £3,000. Similarly, for trustees, the new allowance will be set at £1,500.
  • Increases in wage rates: Effective from the 1st of April 2024, there will be an increment in both the National Living Wage (NLW) and the National Minimum Wage (NMW). The new rate for the NLW will be £11.44 per hour. For the NMW, different rates will apply: £8.60 for individuals aged 18-20, £6.40 for those aged 16-18 and for apprentices, and £9.99 for employees provided with accommodation by their employer.
  • Simplified Research and Development (R&D) tax credit system: From 1 April 2024, for accounting periods beginning on or after this date, a streamlined system will be in place, merging the Research and Development Expenditure Credit (RDEC) with the Small and Medium-sized Enterprises (SME) schemes. This aims to simplify the process for claiming research and development tax credits.

Leveraging technology and AI

In 2024, AI is poised to revolutionise business operations, impacting revenue growth, customer and employee engagement, and new business models. A significant majority of US companies have already adopted AI, with GenAI at the forefront. This technology offers remarkable accessibility and scalability across various business functions, enabling diverse roles from CEOs to software developers and product designers to enhance their work. AI's transformative potential is evident in every aspect of business operations, leading to more powerful and efficient ways of working.

The Rise of ESG as a business imperative in 2024

ESG (Environmental, Social, and Governance) practices are anticipated to become essential elements of business strategies in 2024, reflecting their evolution from being trend-driven to fundamental. This year marks a significant shift where sustainability becomes deeply intertwined with financial and operational decision-making. Expanding sustainability reporting, particularly among private firms, is a key trend, alongside a greater focus on biodiversity and the interplay between environmental and social factors in supply chains. Additionally, businesses are becoming more vigilant about the legal and reputational risks associated with greenwashing. This vigilance is leading to the adoption of more sophisticated and meaningful ESG criteria, highlighting the role of ESG in driving long-term business success and maintaining corporate integrity.

Robust cyber defences

According to new research by Aviva, one in five UK businesses have experienced a cyber attack with nearly one in ten small businesses experiencing this in the last year. The risk is even more pronounced in larger corporate businesses and the impact of such attacks can lead to operational disruptions, data loss, and system lockdowns, with significant financial repercussions.

Smaller businesses are particularly vulnerable, often lacking sufficient cyber insurance or awareness of its availability. This just highlights the critical need for businesses to prioritise robust cyber security strategies and be prepared for potential incidents.

Be prepared!

As we embark on 2024, it's important to plan ahead and be ready for what the year may bring. Every business will have its own unique journey through a landscape rich with both challenges and opportunities. At UHY Hacker Young, we're here to offer guidance and support at every step. If you have any questions or need assistance in planning for the year ahead, feel free to get in touch.

Wishing everyone a prosperous and successful 2024!

The next step

For any information, please contact Alison Price on, or your usual UHY adviser.

Let's talk! Send an enquiry to your local UHY expert.