31/10/2024
Client Budget Update: On Wednesday 30th October 2024, The Chancellor of the Exchequer delivered the Autumn Budget Statement to Parliament.
The Treasury press release provided a summary of the key points arising in the Budget Statement, which includes the following:
Income tax and National Insurance:
The income tax and NIC thresholds in England and Wales will remain frozen until the end of 2027–28, when they will begin to rise in line with inflation.
Rates of income tax and NICs paid by employees will remain unchanged.
Employers’ NICs will rise from 13.8% to 15% on a worker's earnings above £175 from April 2025, and the threshold at which employers start paying the tax on each employee’s salary will be reduced from £9,100 a year to £5k.
The employment allowance will increase from £5k to £10,500.
Our own quick analysis of these measures is that if you’re a small employer with five or less employees (unless they are highly paid), there should be no extra NI burden on you, due to the increase in the employment allowance.
Capital gains tax:
CGT rates will increase from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher rate taxpayers, matching existing rates for property which stay the same. Rates on chargeable gains from selling additional property remain unchanged at 18% and 24%, respectively.
Business asset disposal relief will remain at 10%, before rising to 14% on 6 April 2025, and 18% from 6 April 2026.
The tax treatment of carried interest will be reformed by increasing CGT rates on carried interest to 32% and then, from April 2026, moving to a revised regime.
Stamp duty land tax:
The higher rate for additional dwellings surcharge of SDLT in England and Northern Ireland will rise from 3% to 5%, from 31 October 2024.
Corporation tax:
The main rate of corporation tax paid by businesses on taxable profits over £250k will stay at 25% until the next election.
Value added tax:
The standard rate of VAT will remain at 20%.
VAT at the standard rate will be added to private school fees and boarding services from 1 January 2025.
Inheritance tax:
The IHT threshold of £325k to remain until 2030.
From April 2027, inherited pensions are subject to IHT.
From April 2026, agricultural property relief and business property relief will be reformed, with the highest rate of relief remaining at 100% for the first £1m of combined business and agricultural assets on top of the existing nil-rate bands. The rate of relief will reduce to 50% after the first £1m.
Offshore trusts will no longer be able to shelter assets from IHT, and there will be transitional arrangements for people who have made plans based on current rules.
Business rates:
The current 75% discount to business rates will expire in April 2025 and will be replaced by a discount of 40%, up to a maximum of £110k.
Private schools in England will lose business rates charitable rate relief from April 2025.
Excise duties:
Fuel duty will remain the same for one year and the temporary 5p cut will be extended to 22 March 2026.
Vehicle excise duty first year rates will change from 2025–26, but rates for zero emission cars will remain at £10 until 2029-30, while rates for hybrid and petrol/diesel cars will rise from 1 April 2025.
The Government will uprate alcohol duty in line with RPI, except for most drinks in pubs, for which the duty on qualifying draught products will be reduced.
From 2026-27, air passenger duty (APD) rates for short and long-haul flights will be adjusted, such that, for economy passengers, there will be an increase of £1 for domestic flights, £2 for short haul, and £12 for long-haul flights, with children under the age of 16 remaining exempt from APD. APD for larger private jets will be increased by 50%.
The to***co duty escalator will be renewed, which increases all to***co duty rates by RPI+2%, plus an above escalator increase to hand rolling to***co (totalling RPI+12%).
A new va**ng duty will be introduced at a flat rate of 22p/ml from October 2026, along with a further one-off increase in to***co duty.
The soft drinks industry levy will increase over the next five years and will rise in line with inflation every year going forward.
Non-dom regime:
A new residence-based regime will replace the current non-dom regime from April 2025, but the planned 50% reduction for foreign income in the first year of the new regime will be removed.
Other commitments:
Maintain the current capital allowances system (including permanent full expensing and the £1m AIA).
Maintain the current R&D reliefs.
Develop a new process for increasing tax certainty in advance for major investments.
