The Autumn Budget 2024 brings transformative updates across the UK tax landscape, impacting individuals, businesses, and investors. As the first Labour Budget since 2010, Chancellor Rachel Reeves introduced new tax measures to address public financing while pledging to “build a better Britain.” Here’s a summary of the significant changes and what they mean for you.
Key Tax Changes for Individuals and Families
Personal Tax Rates
The government has opted to freeze personal tax allowances and income tax bands until 2028, which, given inflation, effectively increases the tax burden for many. There was no mention of the High-Income Child Benefit Charge (HICBC) however.
National Insurance Contributions (NIC)
While the NIC rate for employees was reduced in January 2024, from April 2025 employers will face an increased rate of 15%, impacting payroll costs. This could indirectly affect wages or employment growth as wages may grow at a slower rate. Small businesses may benefit, however, as Employment Allowance (EA) will increase to £10,500, exempting more of their NIC obligations. Additionally, the EA cap of £100,000 has been removed, meaning more companies will be able to claim.
Inheritance Tax (IHT)
The Chancellor has introduced stricter limits on agricultural property relief and business property relief, applying only to the first £1 million of an estate’s value from 2026. Qualifying assets valued at over £1 million, will receive relief at 50% on the excess over £1 million, i.e. will be subject to 20% tax. For high value estates, these updates make tax planning essential. In another significant change to IHT, inherited pension pots will no longer be exempt.
Business Tax Adjustments
Corporation Tax
Corporation tax remains at 25% for companies with profits over £250,000, while small profits rates hold steady at 19%. Capital allowances for plant and machinery are maintained, which benefits companies investing in equipment, though the government is considering future modifications to encourage green investment.
Value Added Tax (VAT)
Private school fees will be subject to VAT from January 2025, with anti forestalling rules in effect from earlier this year. This decision is expected to greatly affect school budgets and tuition fees.
Capital Gains and Property Taxes
Capital Gains Tax (CGT)
Effective from today, CGT rates for all assets are standardised, with the main rate rising from 20% to 24%, and the lower rate rising from 10% to 18%. An individual can continue to claim Business Asset Disposal Relief (BADR) on qualifying gains up to a lifetime limit of £1 million as this remains unchanged, the rate however will increase to 14% for 2025-2026 and 18% in 2026 to 2027.
Stamp Duty Land Tax (SDLT)
For individuals purchasing additional properties in England, the surcharge on Stamp Duty will increase from 3% to 5% as of October 2024, impacting buy-to-let and second-home investments. We will have to wait until later this year to see how the Scottish budget potentially impacts Land and Buildings Transaction Tax (LBTT).
Looking Ahead
This Budget’s tax measures focus on increasing government revenue while balancing the need for growth. For many, the changes in NIC, IHT, and CGT create planning opportunities to mitigate potential tax impacts. If you need tailored advice on navigating these tax changes, we’re here to help.
Ensure your financial strategies remain efficient and take advantage of exemptions and allowances to achieve your goals in this evolving tax landscape – take a look at our budget summary for more information.