Autumn Budget 2024

The decision of the first Labour government since 2010 to wait almost four months to unveil the Autumn Budget, along with advance warnings of “painful” measures, made it one of the most highly anticipated fiscal events in years. The first ever female chancellor to deliver a budget, Rachel Reeves presented the largest tax-raising fiscal event in over three decades, £40bn worth of tax rises to help fund injections into the NHS, education and other public services. Here are the highlights from the Autumn Budget 2024:

Capital gains tax

• The main rates of capital gains tax (CGT) will increase from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher and additional rate taxpayers. The changes bring the main rates of CGT into parity with the rates for residential property. The rate increases are effective from 30 October 2024.

• Business Asset Disposal Relief (BADR), which reduces the rate of CGT paid on qualifying gains from business asset disposals, will increase from 10% to 14% from April 2025 and 18% from April 2026. The £1 million lifetime limit on BADR will remain.

Inheritance tax

• Historically excluded from estates for inheritance tax (IHT) purposes, pension savings will be subject to IHT from April 2027. This means the value of pension pots will be added to the value of your other assets when you die and if the total exceeds your IHT threshold, an IHT charge will be due. Reeves also announced that current IHT thresholds will remain frozen until 2030. A small number of specified pension benefits will remain outside scope for inheritance tax, including where funds can only be used to provide a dependants’ scheme pension, e.g. a spouse's pension under a defined benefit pension scheme.

• From April 2026, the government will seek to raise further funds from IHT by reducing agricultural property relief and business property relief. The full relief will continue to apply for the first £1 million of combined business and agricultural assets on top of the existing nil-rate bands, but after that only a 50% relief will apply meaning IHT will be charged at 20%.

• AIM-listed shares will no longer be exempt from IHT, which will be applied at an effective rate of 20% if they are held for two years.

National Insurance and Income Tax 

• The chancellor claimed she has kept the government’s manifesto pledge not to increase taxes on “working people”, including employee national insurance, income tax and VAT. However, employer national insurance will increase from 13.8% to 15% from April 2025.

• The threshold at which employers start paying national insurance on each employee’s salary, called the ‘secondary threshold’, will reduce from £9,100 to just £5,000 per year.

• Small businesses will be protected by the employer NI hikes by increasing the 'employment allowance', the amount employers can claim back from their NI bill, from £5,000 to £10,500.

• Having been frozen since 2021, income tax and employee national insurance thresholds will begin to rise again with inflation in 2028, the chancellor confirmed.

Other 

• The state pension triple lock was mentioned with a rise of 4.1% from April 2025 for the state pension.

• Landlords and those wishing to purchase a second home have also been targeted by the chancellor, as the Stamp Duty Land Tax surcharge applied to purchases of additional residential dwellings will rise from 3% to 5%, effective from 30 October 2024.

• VAT at the full 20% rate will be payable on private school fees from 1 January 2025, and private schools will no longer be eligible for business rates charitable rate relief from April 2025.

• The non-dom tax regime will be abolished from April 2025 and the government will introduce a new residence-based scheme for those coming to the UK on a temporary basis. Part of these measures will include ending the use of offshore trusts to shelter assets from inheritance tax.

• The National Living Wage will increase from £11.44 to £12.21 an hour from April 2025, an increase of 6.7%. The National Minimum Wage for 18 to 20-year-olds will rise from £8.60 to £10.00 per hour.

• A new vaping duty will be introduced from October 2026 at a flat rate of 22p/ml, along with a further one-off increase in tobacco duty.

• Fuel duty will remain frozen for another year and the temporary 5p cut will also be extended to March 2026.

• Other duties are increasing in line with inflation, including air passenger duty and alcohol duty, though the government is reducing duty on draught beers sold in pubs.

• Closing the tax gap will see HMRC recruit 5000 additional compliance staff to assist people to pay the tax they owe.

If you have questions or concerns about how any of these announcements may impact your financial plans, please do not hesitate to get in touch. 

Coming soon....

A comprehensive overview of the Autumn Budget 2024, including expert opinion on what was announced and how it may impact your financial plans.