Autumn Budget 2024
Today, the Chancellor of the Exchequer, Rachel Reeves, delivered the highly anticipated first Budget of the new Labour Government. She had promised that her debut budget would lead to more ‘pounds in pockets’ and would also focus on ‘rebuilding Britain’. The first female Chancellor of the Exchequer said that her measures are set to raise taxes by £40bn.
So, what exactly does today’s Autumn Statement mean for individuals and businesses? We’ve summarised the key announcements below to help you to understand the latest measures and how they may impact you and your business:
Individuals
Personal Income Tax: No changes. The freeze on IT and NI thresholds will not be extended beyond 2028.
National Insurance: No increase to employee NI (Class 1) although Class 2 and Class 3 NICs will be increased in 2025-26 to £3.50 per week, and £17.75 per week.
State Pension: The basic and new State Pension will increase by 4.1% from April 2025.
National Living Wage: This will be increased by 6.7%, from £11.44 to £12.21 an hour from April 2025.
National Minimum Wage: For 18–20 year-olds, this will increase to £10.00 per hour for all eligible workers.
High Income Child Benefit Charge reform: The government will not proceed with the reform to base the HICBC on household incomes. The government will allow employed individuals to pay their HICBC through their tax code from 2025 and pre-populate Self-Assessment tax returns with Child Benefit data.
Non-UK Domicile: The government will legislate to abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler and internationally competitive residence-based regime from 6 April 2025, as previously announced.
ISA: Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs until 5 April 2030.
Inheritance tax (IHT): No change to the current thresholds. However, the government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6 April 2027.
Agricultural property relief and business property relief: This will be reformed from 6 April 2026. In addition to existing nil-rate bands and exemptions, the current 100% rates of relief will continue for the first £1 million of combined agricultural and business property to help protect family businesses and farms. The rate of relief will be 50% thereafter.
Capital Gains Tax (CGT) Rates: The lower and higher main rates of Capital Gains Tax will increase to 18% and 24% respectively for disposals made on or after 30 0ctober 2024.
Business Asset Disposal Relief and Investors’ Relief: Rates will increase to 14% from 6 April 2025 and will increase again to match the lower main rate at 18% from 6 April 2026. The lifetime limit for Investors’ Relief will be reduced to £1 million for all qualifying disposals made on or after 30 0ctober 2024, matching the lifetime limit for Business Asset Disposal Relief.
Stamp Duty Land Tax: From 31 October 2024 the Higher Rates for the second property surcharge on Stamp Duty Land Tax will be increased by 2 percentage points from 3% to 5% in the UK and Northern Ireland.
Fuel duty rates: The government will freeze fuel duty rates for 2025- 26.
Late payment interest rates on unpaid tax liabilities: The government will increase the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5 percentage points from 6 April 2025.
Businesses
Corporate Tax: No changes to rates. The government has published a Corporate Tax Roadmap which includes a commitment to cap the Corporation Tax Rate at 25%, maintain the Small Profits Rate, marginal relief, and thresholds at current rates. Key features such as Full Expensing, the Annual Investment Allowance and R&D relief rates will be maintained.
National Insurance: The government will increase the rate of employer NICs from 13.8% to 15% from 6 April 2025. The Secondary Threshold (the point at which employers become liable to pay NICs on employees’ earnings) will reduce from £9,100 a year to £5,000 a year from 6 April 2025 until 6 April 2028.
Employment Allowance: This will increase from £5,000 to £10,500. The £100,000 threshold for eligibility will be removed from 6 April 2025.
Business Rates – retail, hospitality and leisure relief: For 2025-26, eligible retail, hospitality and leisure (RHL) properties in England will receive 40% relief on their business rates liability. RHL properties will be eligible to receive support up to a cash cap of £110,000 per business.
Company Car Tax rates: The government is setting rates for Company Car Tax for 2028-2029 and 2029-30 to provide long term certainty for taxpayers and industry. The rates will continue to strongly incentivise the take-up of electric vehicles, while rates for hybrid vehicles will be increased to align more closely with rates for internal combustion engine (ICE) vehicles, to focus support on electric vehicles.
Alcohol duty: The government will support pubs and the wider on-trade by cutting alcohol duty rates on draught products below 8.5% alcohol by 1.7% promising a ‘penny off a pint in the pub’.
Capital allowances: Green First Year Allowances – The government will extend for a further year the 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle charge points, to 31 March 2026 for corporation tax purposes and 5 April 2026 for income tax purposes.
Close Company Loans to shareholders: The government will ensure shareholders cannot extract funds untaxed from close companies by legislating to remove opportunities to side-step the anti-avoidance rules attached to the loans to participators regime. This change will apply from 30 0ctober 2024.
Stamp Duty Land Tax: The single rate of SDLT on the purchase of dwellings costing more than £500,000 by corporate bodies will also be increased by 2 percentage points from 15% to 17%.
VAT: VAT on private school fees will be introduced from January 2025.
As always, our team are here to answer any questions you may have. Please do contact us if you have any questions or call us on 01276 61203
Jo Hardy – Personal Tax Director
