Autumn Budget Overview 2024

 

On Wednesday 30 October, the highly-anticipated Autumn Budget from the Labour Government was announced.

As Labour’s first Budget in a decade and a half, Rachel Reeves, Chancellor of the Exchequer, had warned there would be “difficult decisions” on tax, spending, and welfare.

Our TC Group team have summarised the key headlines, focusing on the points that may impact you, your business, and your employees.

• Debbie Ince, Head of Tax (TC SEM)
• Trevor Shaw, Tax Director
• Nigel Syson, Associate Director – Tax
• David McGeachy, Partner – Head of VAT
• Felix Medd, Head of R&D

 

NATIONAL INSURANCE PAYMENTS FOR BUSINESSES

The largest piece of news was the announcement of Employers being hit with additional tax costs.

From April 2025, NI for Employers will increase from 13.8% to 15%. Additionally, the point at which businesses pay NI for each employee’s salary has reduced from £9,100 to £5,000. Resulting in an increased cost for business owners.

This means that Employers’ payroll costs will increase by a minimum of £615 for every employee. The additional payroll cost for an employee on an average salary, is nearly £1,000.

For smaller Employers, the Employment Allowance increased from £5,000 to £10,500 – so they’ll be protected from some of the NI increase.

 

CAPITAL GAINS TAX

Effective from today, CGT increases for both the lower rate and higher rate. Now increasing to 18% from 10% for the lower rate, and increasing to 24% from 20% for the higher rate. This means that CGT rates are now aligned with CGT rates on property.

For Business Asset Disposal Relief, this will remain at £1m for qualifying business owners. However, the tax rate will increase from the current 10% to the following:

• 14% from 6 April 2025.
• 18% from 6 April 2026.

 

INHERITANCE TAX

The current Nil rate band for Inheritance Tax has been frozen at £325,000 until 2030.

Inherited pensions are now to be included in the Inheritance Tax net.

For Agricultural Property Relief (APR) and Business Property Relief (BPR), this is limited to £1m on a combined basis from April 2026 with 50% relief thereafter.

50% relief on AIM shares resulting in effective rate of 20% IHT.

 

STAMP DUTY LAND TAX

The rate of SDLT surcharge on second homes has increased from 3% to 5% from Thursday 31 October. For example, the SDLT on acquiring a second home for £300,000 will increase by £6,000.

For first time buyers, which currently enables a home to be bought for up to £425,000 without a SDLT charge, is due to expire on 31 March 2025. This hasn’t been extended.

The increase in the surcharge rate may restrict the acquisition of second homes, which may improve the property market opportunities for potential homeowners. But the impact on first time buyers will make it more difficult for them to enter the market, and so hinder the property market.

 

ABOLISHMENT OF NON-DOMICILE TAX REGIME

Abolishment of non-domicile tax regime from 6 April 2025 with no temporary reliefs available.

No longer able to shelter income generated by foreign assets from UK income tax.

Replaced by a new residency-based regime applying to all individuals universally.

Removes possibility of using offshore trusts to hold assets outside of the scope of UK inheritance tax.

 

RESEARCH & DEVELOPMENT, AND INNOVATION TAX RELIEF

No changes have been announced to R&D tax relief.

Employers’ National Insurance contribution rises results in an increase in employment costs being claimable.

Increased reliefs for visual effects and film tax reliefs have been announced, with more information to come.

 

INCOME TAX

No changes have been made to the basic, higher and additional rate bands – remaining at 20%, 40% and 45%, respectively.

Dividend rates remain at 8.75%, 33.75% and 39.35% also.

The Budget also confirmed that the Personal Allowance threshold will remain frozen until 2027/28, staying at £12,570. The Personal Allowance will rise with inflation from 2028/29.

 

CORPORATION TAX

The Corporation Tax rate’s remaining the same at 19% for profits made under £50,000 and 25% for profits made over £250,000.

Annual investment allowance and full expensing on capital expenditure retained for the life of this parliament.

 

HMRC COMPLIANCE & ENQUIRIES

It was briefly mentioned that there were plans in place to modernise HMRC systems.

Recruiting additional compliance and debt staff were also mentioned, which links to the Government’s plan to increase tax enquiries and narrow the tax gap.

Increase the rate of interest on unpaid tax.

 

NATIONAL LIVING WAGE

The National Living Wage will be increased from £11.44 to £12.21 an hour from April 2025.

For 18 to 20-year-olds, the minimum wage will also rise in April 2025 from £8.60 to £10 as part of the long term plan to move towards a “single adult rate”.

The rates of VAT will not change nor will there be any changes to VAT registration thresholds.

As expected, it was confirmed that VAT on private school fees will apply from 1 January 2025.

 

FUEL DUTY

The original fuel duty, which saw petrol and diesel to be cut by 5p, was due to end in April 2025. This has now been extended for another year.