2024 Autumn Budget: the highlights
Today we had the first Labour budget since 2010. What are the key takeaways?
Income and personal taxes. In keeping with pre-election promises, there will be no changes to the current bands or rates for income tax, primary Class 1 NI, Class 4 NI or dividends. An unexpected announcement is that the personal tax thresholds will unfreeze from April 2028. It was rumoured that the current rates would be locked in for a further two years. Instead they will now increase annually, likely in line with CPI.
For employees with company-provided cars, the percentage for zero emission and electric vehicles will increase by two percentage points per year in 2028 to 2029 and 2029 to 2030, rising to 9% in 2029 to 2030.
The domicile status will cease to apply for income tax and capital gains tax (CGT) as planned.
Business taxes. A leaked increase in the rate of secondary Class 1 NI was confirmed, with the rate increasing to 15% from April 2025. This was coupled with a reduction in the payment threshold to £5,000 (£96.15 per week). However, to ensure this doesn’t adversely impact smaller employers, the employment allowance will increase to £10,500 – more than double its current level.
Despite significant criticism, the previously-announced application of VAT to private school fees will go ahead. Further details should be available soon.
Capital taxes. The two-tiered system of CGT rates will be retained, but the rates are increased with immediate effect to 18% and 24%, aligning the rates applicable to assets generally with those for residential property. The trust rate increases to 24% accordingly. This applies to disposals made on or after 30 October 2024. The rate applying to carried interest will increase to 32% from April 2025, with further reform promised.
The rate that applies to business asset disposal relief and investors’ relief is increasing to 14% for disposals made on or after 6 April 2025 and from 14% to 18% for disposals made on or after 6 April 2026. The lifetime limit for investors’ relief reduces to £1 million (from £10 million) for disposals made on or after 30 October 2024.
Inherited pensions will be brought within inheritance tax from April 2025. Agricultural property relief and business property relief will be made far less generous by restricting the value that can qualify for relief at 100%. The existing 100% rates of relief will continue for the first £1 million of combined agricultural and business property. The rate of relief will be 50% thereafter, and in all circumstances for shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM.
Other taxes. The stamp duty land tax surcharge for purchases of additional dwellings increases to 5% (from 3%) from 31 October 2024. This also increases the rate paid by companies etc to 17% for residential properties over £500,000.
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Should you revoke your 20-year-old option?
Your business has let out a building to a tenant and it is now just over 20 years since you opted to tax the property with HMRC. Should you revoke it so that your tenant no longer needs to pay VAT?
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Chip shop owner fined £40k for hiring illegal worker
A Surrey fish and chip shop owner has been left in shock after being fined £40,000 for allegedly employing someone who didn’t have the right to work in the UK, even though he conducted a right to work check. Where did this employer go wrong and what can you learn from it?
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Increase the IHT-free part of your estate by 50%
Your father died leaving his entire estate to your mother who later remarried. You’ll inherit some or all of her estate depending on whether she dies before her husband. What steps can be taken to reduce the inheritance tax (IHT) on the estate?