The Autumn Budget 30th October 2024
There was much speculation regarding what measures Chancellor Rachel Reeves would announce to raise billions of pounds in taxes to fill the “£22bn black hole” in the public finances and balance this with the investments the Government wants to make.
A more detailed summary can be found in our Budget Summary, which can be downloaded using the link below but the brief headlines are:
Capital Gains Tax (CGT)
A significant increase to the lower rate from 10% to 18% and the higher rate will increase from 20% to 24% for disposals made on or after 30 October 2024.
CGT rates on residential property remain at 18% and 24%.
Business Asset Disposal Relief (BADR) which currently reduces the effective CGT rate to 10% will remain at 10% this year before rising to 14% for disposals made on or after 6 April 2025 and from 14% to 18% for disposals made on or after 6 April 2026. The Chancellor confirmed that the £1m lifetime limit for BADR would remain unchanged.
Inheritance Tax (IHT)
The freeze on inheritance tax thresholds will be extended until 2030. The nil rate band has been frozen since 2009 so now significantly out of step with inflation, meaning more estates will be caught by the IHT net.
It was announced that inherited pensions will form part of the deceased’s estate from April 2027, meaning pensions passed on will potentially be subject to IHT.
Business relief and agricultural property relief were also targeted. From April 2026, the first £1m of combined business and agricultural assets will continue to be eligible for the existing 100% relief. However, assets over £1 million and shares listed on AIM and similar markets will only be eligible for 50% relief, with an effective rate of inheritance tax at 20%.
Pensions
No changes were made to pension tax relief or the tax-free lump sum that retirees can withdraw from their pension at the age of 55 upwards (set to rise to age 57 in 2028). There is currently a maximum limit of £268,275 that can be taken as a tax-free lump sum.
Employers National Insurance
As expected, Rachel Reeves announced an increase to employer’s National Insurance Contributions from 13.8% to 15% from April 2025.
Reeves added that there would be a reduction to the level at which employers start paying NI on an employee’s salary. The updated threshold will now be set at £5,000, down from £9,100.
Employment Allowance
This allows eligible employers to reduce their annual National Insurance liability. The Allowance prior to the Budget announcement was £5,000. This will be increased to £10,500. The allowance will also be extended to all eligible employers, removing the £100,000 cap.
Personal Allowances
Personal tax thresholds on income tax and National Insurance will rise in line with inflation from 2028/29,
Non-domicile tax status (‘non-doms’)
A simpler residence-based scheme will replace the non-dom rules with considerations for workers coming to the UK on a temporary basis. This will apply in the first 4 years of tax residence, provided individuals have not been a UK tax resident in any of the 10 consecutive years prior to their arrival.
Electric vehicles
Businesses acquiring zero-emission cars or installing electric vehicle charge-points received an extension on the availability of the 100% first-year allowance for qualifying expenditure on zero-emission cars and the 100% first-year allowance for electric vehicle charge-points to 31 March 2026 for Corporation Tax purposes and 5 April 2026 for income tax purposes.
Stamp Duty Land Tax (SDLT)
There was an announcement that the SDLT surcharge for second homes, known as the higher rate for additional dwellings, would rise by 2% to 5% with effect from 31st October 2024. The higher rate of 15% paid by companies for purchases of expensive property will also increase by 2% to 17%.
VAT on school fees
The Budget saw the confirmation that the Government will introduce VAT on private school fees from January 2025.
Summary
This Budget sees the largest increase in UK taxation in over 30 years, with employers and business owners set to bear the brunt of an estimated £40bn worth of tax rises and spending cuts across government.
There is no doubt that this has been the most eventful budget for some time, and there will be much to digest and plan for in the months ahead.
Should you or your business need any assistance with any of the above, please do not hesitate to contact us on the link below.
We have moved
For those not yet in the know, Continuum Limited has moved and we are currently in temporary accommodation at Basepoint Business Centre in Winnall. Those clients who have been with us a while may remember that this is where we were some five years ago. Our departure from Cromwell House was at somewhat shorter notice than we would have liked and we are in Basepoint until what we hope will become our new permanent home is acquired. Anyone who has ever moved house knows that these things never proceed as planned, so ‘watch this space’ and we will keep you updated. With agreement from our previous landlord, Cromwell House remains our (and clients’) Registered Office and post is being forwarded from there to us at basepoint so it is business as usual!
If you have any questions, on anything, don’t hesitate to contact us below: