2024 Autumn Budget
Rachel Reeves promised that her budget would restore economic stability and rebuild Britain. We knew tax rises were inevitable and after weeks of speculation and uncertainty the tax rises have been confirmed.
Here’s our round up of the key announcements:
Capital Gains Tax (CGT)
As expected CGT rates are increasing. There was no change to the CGT rates for residential properties and the increase to 18% (from 10%) and 24% (from 20%) for other assets means that the CGT rates are now aligned.
The change will apply to disposals made on or after 30 October 2024.
Business Asset Disposal Relief (BADR) currently applies to the disposal of qualifying assets and results in a 10% tax rate on gains up to £1m. There will be a phased increase in the tax rate to 14% in April 2025 and to 18% in April 2026.
Whilst the CGT increases won’t be welcomed by investors, especially after the recent drop in the annual exemption, it could have been worse with some commentators even suggesting that CGT could have been brought into line with income tax rates.
National Insurance Contributions (NIC)
The rise in employer’s NIC has sparked a debate as to whether Labour have breached their manifesto promise.
Labour believes that the increase in the rate of employer’s NIC from 13.8% to 15% from April 2025, and the decrease in the level at which it is due to £5,000 (from £9,100), will not hit the pocket of the working people it promised to protect. Smaller businesses will be sheltered from the increase by an increase in the employer’s allowance to £10,500.
Inheritance Tax (IHT)
The IHT regime saw some significant changes although again not as drastic as had been anticipated.
The nil rate band of £325,000 has been frozen until 2030 with additional taxes being collected through the resulting fiscal drag.
The unlimited 100% Business Property Relief (BPR) and Agricultural Property Relief (APR) have been restricted to £1m with only 50% relief thereafter. The changes are effective from 6 April 2026.
AIM shares will attract only 50% tax relief instead of 100% relief previously.
Pensions have been a very favourable tax planning tool and have fallen outside the estate for IHT purposes but from April 2027 this will no longer be the case.
Stamp Duty Land Tax (SDLT) and Property Taxes
Those purchasing second properties will be hit with a 2% increase in the SDLT rate from 31 October 2024.
It has been confirmed that the specific tax treatment for furnished holiday lets will be withdrawn from April 2025.
Minimum Wage Increase
In April 2025 the minimum wage is set to increase above the rate of inflation to £12.21 per hour and those aged between 18 and 20 will benefit from an additional boost as the minimum wage for this age increases further with the aim being to align the minimum wage for all adults over 18 in the future.
With increases across a wide variety of taxes it is important that individuals assess their current position and seek professional tax planning advise in the coming months.
