Rachel Reeves, the new Labour Government Chancellor of the Exchequer, presented the Party’s first Budget since 2010 – making history as the UK’s first female Chancellor. She expressed hope that her role will encourage further strides toward gender equity.
Her Budget speech, which ran over 90 minutes, included some pointed critiques of the opposition and set out significant tax changes and public service investments. Mrs. Reeves’ primary focus is on substantial investment in public services, with the Budget outlining £40bn in tax increases to support these plans. The scale of financial commitments to infrastructure, public transport, education, and especially the NHS, is notable. Yet, as with every Budget, the finer details will be key in understanding its full impact.
The Government’s summary can be found here: Autumn Budget 2024 (HTML) – GOV.UK – it’s a lengthy read!
While some tax measures, like the Employers’ National Insurance increase, were anticipated, additional tax rises and threshold adjustments may impact both business and personal tax planning. Below, we’ve outlined the most notable announcements relevant to our clients:
Personal Taxes
- National Minimum Wage: Set to increase in April 2025 to a standard national rate of £12.21 per hour. For 18-20-year-olds, the rate will rise to £10 per hour, with wages for under-18s and apprentices increasing to £7.55 per hour.
- Income Tax and Employee National Insurance: Thresholds will remain frozen, adjusting with inflation from 2028/29.
- Inheritance Tax: IHT thresholds, including residence thresholds, are frozen until 2030. A residence-based system is planned from April 2025, and inherited pensions will be included in IHT from April 2027.
- State Pension: Increases by 4.1% from April 2025.
- Stamp Duty Land Tax: Surcharge on second homes and limited companies rises to 5% from tomorrow (31st October 2024).
- Right to Buy: Discounts will be reduced, leading to higher costs for buyers.
- Non-domiciled Regime: Abolished from April 2025, and replaced with a new residence scheme allowing a four-year tax-free period for new residents who opt in.
Company Taxes
- Employers’ National Insurance: Increasing by 1.2% to 15% from April 2025, with the threshold dropping from £9,100 to £5,000.
- Employment Allowance: Rising from £5,000 to £10,500, with the £100,000 threshold removed to expand eligibility. This will come into effect from 6th April 2025.
- Corporation Tax: Remains at current rates; a Corporate Tax Roadmap will be published by Government today with further details.
- Capital Gains Tax: The lower rate rises from 10% to 18% and the higher rate from 20% to 24%, effective today, with further changes to Business Asset Disposal Relief. Rates on residential property remain unchanged, while the Carried Interest rate will rise to 32% starting in 2025. The £1m Business Asset Disposal Relief will also be retained, with the rate increasing to 14% from 6th April 2025, and further to 18% from 6th April 2026, aligning with the main lower rate of CGT.
- EIS & VCT: Remains in place until 2035.
- Tax Avoidance Measures: The Government will intensify its crackdown on umbrella companies and promoters of tax avoidance schemes.
- Business Rates Relief: Reducing from 75% to 40% for retail, hospitality, and leisure in 2025/26, capped at £110,000 per business.
- Energy Profits Levy (EPL): Increased to 38%, with the 29% investment allowance removed, extended to 31st March 2030.
- Business Property Relief & Agricultural Property Relief: These reliefs will continue but with reduced generosity. The first £1 million remains eligible for 100% relief, while amounts above this threshold will receive 50% relief, resulting in an effective tax rate of 20% on amounts exceeding £1 million.
Other Taxes
- Fuel Duty: Frozen for another 12 months.
- Tobacco Duty: Increasing with RPI and a £2.20 flat rate on vape products.
- Draft Alcohol Duty: Set to decrease by 1.7%
- Air Passenger Duty: A 50% increase will apply to private jet travel.
- VAT on Private Education Fees: Effective January 2025, with Business Rates Relief also to be removed.
A more comprehensive analysis is available to download here: www.championgroup.co.uk/wp-content/uploads/2024/10/Champion-Autumn-Budget-2024-Summary.pdf
As always, please don’t hesitate to contact your Champion office with any questions or insights specific to your tax planning.
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