30/10/2024
This was a big budget, according to the IFS the second largest tax raising budget in history and there are many changes that affect the tax landscape for small businesses. I have captured the salient points below, but if you have any specific questions please get in touch and I will be happy to help.
• National insurance for employers was confirmed to have increased by 1.2% to 15%. What is more striking is the reduction in the secondary threshold to £5,000. This means the point at which you start to pay employers NIC is now much lower. However, the employment allowance has been increased to £10,500 so many of the smallest employers will pay no employers NIC at all.
• The national living wage is increasing to £12.21 with proportionally larger increases for the younger age groups. The plan is to move towards a single adult rate for all ages.
• Capital gains tax is to be increased to 18%/24% at the lower/higher rates. This is across all assets so that there is no longer a separate rate for residential property. This change comes into effect from today.
• Business asset disposal relief maintained at 10% but the rate is increasing to 14% from 2025, then 18% from 2026. The £1m lifetime limit was maintained. That gives some relief to those looking at selling their businesses up to the new tax year, but it will focus the mind on whether now is the correct time to retire, if that is something currently being considered.
• 40% relief on business rates for those in retail, hospitality & Leisure.
• Inheritance tax – Thresholds were frozen which means more estates will fall into IHT and although the first £1m of combined business and agricultural assets will continue to attract no inheritance tax, those over £1m inheritance tax will apply with a 50% relief at an effective rate of 20%.
• 2027 pensions brought into inheritance tax. This is big news as previously pensions were exempt from IHT.
• There will be investment into HMRC debt collection and compliance departments, along with a clamp down on umbrella companies.
• If you have any debts with HMRC the rate of interest is going to be increased to encourage on time payment of taxes.
• The Fuel Duty freeze was maintained which is a boon to those in haulage or transport as well as those who do a lot of travel.
• Investment allowances, capital allowance and R&D rates were all maintained.
• 2025 non-dom regime removed. A new residence basis scheme will be put in its place.
• Stamp duty on second homes raised to 5% from today.
• Tax thresholds will be uprated in line with inflation, but this is only from 2028/2029, for the next couple of tax years fiscal drag will continue to be a factor.
I hope you have found the above useful, if you have any questions or want to discuss the budget with me then please get in touch.
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