Autumn 2024 has arrived with significant developments impacting individuals, businesses, and agricultural enterprises. Our latest tax bulletin delves into the key updates and offers insights to help you navigate these changes effectively.
Key Highlights from the Bulletin
- Changes to Capital Gains Tax (CGT) One of the most noteworthy updates involves an increase in CGT rates. The lower rate has risen from 10% to 18%, while the higher rate has moved from 20% to 24%. These changes, effective immediately, bring alignment with residential property tax rates. Importantly, Business Asset Disposal Relief (BADR) remains, with phased rate increments planned through 2025 and 2026. This continuity offers opportunities for strategic planning, allowing business owners to adjust their asset disposal timelines for optimal outcomes.
- Impact on Inheritance Tax (IHT) Inheritance Tax reforms present new challenges, particularly affecting Business Property Relief (BPR) and Agricultural Property Relief (APR). The reforms cap reliefs at 100% for the first £1 million in assets and 50% beyond that threshold, posing significant implications for family-owned enterprises and farming operations. As succession strategies are re-evaluated, proactive estate planning is crucial to mitigate potential tax burdens.
- Employer NIC Increases Employers face an increase in National Insurance Contributions (NIC) starting April 2025, with the rate climbing to 15% from 13.8%. The reduced secondary threshold of £5,000 adds further pressure, although an increased Employment Allowance of £10,000 provides some relief for smaller businesses. This shift is particularly relevant for sectors like hospitality and retail, where wage growth and compliance costs already strain operational budgets.
- Pension and Wealth Protection For those leveraging pension funds as a means of estate protection, the rules are changing. Effective from April 2027, undrawn pension assets will be included in the estate for IHT calculations, potentially incurring a 40% tax. Strategies involving drawdowns and income gifting may become more valuable as part of a revised wealth transfer approach.
Looking Ahead: Proactive Planning
These updates underscore the importance of staying informed and adapting financial strategies. Whether you’re assessing capital gains, planning business succession, or safeguarding your estate, understanding the nuanced impacts of these changes is essential. Our team of experts is committed to guiding clients through these shifts, ensuring that your tax strategy remains robust and aligned with your financial goals.
Explore the full bulletin to gain comprehensive insights and expert commentary on the evolving tax landscape. Let’s work together to safeguard your interests and seize opportunities within the current framework.