Posted by Adrian Trace on 04 Nov 2024
Autumn Budget 2024- Highlights
On 30 October 2024, the UK received the first Budget from the Labour Party in 14 years, and the first ever from a female Chancellor. It was a Budget where many expected tax increases came to pass, whilst other feared changes did not materialise. Some significant future changes were announced, but with limited detail available at this time. The headline changes are below
Capital gains tax (CGT) – The rates of CGT are increased from 30 October 2024 from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher rate taxpayers. Rates on chargeable gains from selling residential property remain unchanged at 18% and 24%, respectively.HMRC took the view that the careless actions of the directors of the company in implementing the EBT loan scheme meant that the PAYE determinations could be issued to the company up to 6 years after the end of the tax year in question.
Business asset disposal relief will remain at 10%, before rising to 14% on 6 April 2025, and 18% from 6 April 2026.
The tax treatment of carried interest will be reformed by increasing CGT rates on carried interest to 32% and then, from April 2026, moving to a revised regime.
Non-dom regime: As previously announced, a new residence-based regime will replace the current non-dom regime from April 2025, but the planned 50% reduction for foreign income in the first year of the new regime will be removed.
Inheritance tax: Whilst it was confirmed that the IHT threshold of £325k is to remain until 2030, there were significant changes to IHT.
From April 2027, inherited pensions are subject to IHT. There is limited detail on this, but it appears to bring pensions fully within the scope of IHT
From April 2026, agricultural property relief and business property relief will be reformed, with the highest rate of relief remaining at 100% for the first £1m of combined business and agricultural assets on top of the existing nil-rate bands. The rate of relief will reduce to 50% after the first £1m.
As previously announced, offshore trusts will no longer be able to shelter assets from IHT, and there will be transitional arrangements for people who have made plans based on current rules.
Income tax and National Insurance: The income tax and NIC thresholds in England and Wales will remain frozen until the end of 2027–28, when they will begin to rise in line with inflation.
Rates of income tax and NICs paid by employees will remain unchanged, but Employers’ NICs will rise from 13.8% to 15% on a worker’s earnings above £175 from April 2025, and the threshold at which employers start paying the tax on each employee’s salary will be reduced from £9,100 a year to £5k. To slightly temper this for small businesses, the employment allowance for employer’s NICs will increase from £5k to £10,500.
Corporation tax: Stability was the central message here, as it was announced that corporation tax rates and thresholds would remain unchanged until the next election.
The Government has also committed to maintain the current capital allowances system (including permanent full expensing and the £1m AIA) and to maintain the current R&D reliefs, as well as stating an intention to develop a new process for increasing tax certainty in advance for major investments.
Stamp duty land tax: The higher rate for additional dwellings surcharge of SDLT in England and Northern Ireland will rise from 3% to 5%, from 31 October 2024. A similar 2% increase will apply to the flat rate for companies purchasing property worth over £500k.
VAT: The announce addition of VAT at the standard rate for private school fees and boarding services will apply from 1 January 2025.
If you would like any advice regarding any of the Budget changes mentioned above, or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or customerservice@taxinnovations.com
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