2024 UK Autumn Budget Summary
Today, Wednesday 30 October 2024, the first Labour Budget in 14 years was unveiled by the UK’s first female Chancellor, Rachel Reeves. If we were being cynical we could summarise this by saying she is going to tax us more, chase us more and punish us more if we do not comply or comply late.
However, while there are some detrimental changes to taxation, most of them are not as bad as we thought they would be, e.g. dividends have not been hit, pension contribution limits remain the same, and taxes on property increases were not as bad as expected.
In an effort to address the “£22 billion black hole” reportedly left by the previous Conservative government, the Chancellor declared difficult decisions were necessary to inject funds into the UK economy, with economic stability as the top priority. While she assured that tax would not increase for “working people” to keep more earnings in their pockets, businesses, second-home buyers, private jet users, and consumers of vapes and tobacco will see targeted measures. Speculation about an across-the-board Capital Gains Tax (CGT) hike was addressed, with rates on residential property remaining unchanged, though other CGT rates will see increases.
See how the 2024 Autumn Budget could affect you and your business by reading our summary of key changes below.
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Companies
- VAT and Corporation tax rates remained the same
- Hybrid vehicles will be taxed in line with petrol vehicles for company car purposes
- From April 2025, double-cab pick-ups with a payload of 1.0 tonne or more will be treated as cars for tax purposes, affecting Corporation tax, capital allowances, and benefit-in-kind calculations (this won’t affect double cap pick up’s already on hand)
- Green First Year Allowances: The 100% First Year Allowances for zero-emission cars and electric vehicle charge points are extended by one year, until 31 March 2026 for Corporation Tax
- The government has published a Corporate Tax Roadmap:
- Corporation Tax Rate: Capped at 25%
- Small Profits Rate & Marginal Relief: Maintained at current rates and thresholds
- Key Features: Full Expensing, Annual Investment Allowance, R&D relief rates, and Patent Box remain unchanged
- Future Exploration: New process for advanced assurance for major projects and improvements to tax administration
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Self Employed
- No Changes to VAT, income tax or class 4 national insurance
- No changes to the previous announcement to abolish class 2 National Insurance from April 2024, saving the average self-employed person £192 a year
- From April 2025, double-cab pick-ups with a payload of 1.0 tonne or more will be treated as cars for tax purposes, affecting income tax, capital allowances, and benefit-in-kind calculations. (this won’t affect double cap pick up’s already on hand)
- Green First Year Allowances: The 100% First Year Allowances for zero-emission cars and electric vehicle charge points are extended by one year, until 5 April 2026 for Income Tax
- No Changes to VAT, income tax or class 4 national insurance
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Employers
- Employer National Insurance rate to increase by 1.2% to 15% from April 2025
- Threshold for when employer’s NIC becomes payable will fall to £5,000 from £9,100 from April 2025
- The Employment Allowance will increase from £5,000 to £10,500, and the £100,000 eligibility threshold will be removed. This means that 865,000 businesses will pay no NICs at all
- From 6 April 2025, businesses can hire up to four full-time (35 hours per week) workers on the national living wage without paying employers’ National Insurance on their wages. Those employers with more than 7 employees on a rate of £600 or more per week, will be worse off.
- Employee National Insurance rate remains unchanged
- Changes announced to enhance employee protections, including stronger unfair dismissal rules, extended maternity and parental leave, and default flexible working from day one
- The National Living Wage will rise from April 2025 (See more below)
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Property Taxes
- Stamp Duty for those who purchase more than one property will increase from 3% to 5% from tomorrow (31 October 2024)
- Stamp Duty Relief: First-time buyer relief now applies only to properties priced up to £500,000
- Capital Gains Tax (CGT) rates on assets (not including residential property) are set to increase from 10% to 18% for basic rate taxpayers, and 20% to 24% for those who pay at the higher rate from tomorrow (31 October 2024)
- CGT rates for the sale of residential property remain the same and will now be in line with other CGT rates, as noted above
- Stamp duty relief for people who purchase more than one property in a single transaction has been abolished
- No withdrawal announced about the abolished Furnished Holiday Lettings relief – will stop from April 2025
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Inheritance Tax (IHT)
- Inheritance Tax Rate of 40% to remain the same
- The Inheritance Tax threshold freeze will remain at £325,000 until 2030
- Unused inherited pension pots will be subject to inheritance tax from April 2027
- From April 2026, the first £1 million of combined business and agricultural assets will continue to attract no inheritance tax at all
- For business and agricultural assets over £1 million, inheritance tax will apply with 50% relief, at an effective IHT rate of 20%
- Tax relief on inherited Alternative Investment Market (AIM) shares is set at 50% in all circumstances
- Inheritance Tax Rate of 40% to remain the same
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National Living Wage Changes From April 2025
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Individuals & Other
Benefits and Carers Allowance
- The weekly earnings limit for Carer’s Allowance will be increased to the equivalent of 16 hours at the National Living Wage per week (195.36 per week or £10,158.72 per annum) from April 2025
- The state pension will increase by 4.1% in April 2025, in line with average earnings:
- For those who reached state pension age after April 2016, the full new state pension is expected to rise to £230.30 per week (about £11,975 per year), an increase of £473 annually.
- For those who reached state pension age before April 2016, the full basic state pension is expected to increase to £176.45 per week (around £9,175 per year), an annual rise of £361.
However, it was previously announced that millions of pensioners will lose their winter fuel payment, which is worth up to £300
- The amount received in benefits will rise by 1.7% in April, in line with inflation.
- The chancellor advised there would be a widespread review of health and disability benefits
Other
- Capital Gains Tax (CGT) rates on assets (not including residential property) are set to increase from 10% to 18% for basic rate taxpayers, and 20% to 24% for those who pay at the higher rate from April 2025
- Income tax and National Insurance thresholds will not remain frozen beyond what the previous government decided. Starting in 2028-29, these thresholds will increase with inflation
- Frozen the fuel duty for the 15th year in a row for another 12 months, maintaining the 5p cut
- Tax on tobacco will increase by 2% above inflation and 10% above inflation for hand-rolling tobacco
- A flat rate of duty will be applied on all vaping liquid from October 2026, at £2.20 per 10ml vaping liquid
- VAT at the standard rate of 20% will be added to private school fees from 1 January 2025
- Non-dom tax regime to be abolished from April 2025
- New Residence-Based Scheme: A new, simpler residence-based tax scheme will be introduced for temporary residents
- Draught Products: Duty rates on draught beer, cider, wine, and spirits reduced by 1.7%
- Non-Draught Products: Duty rates on non-draught alcoholic products increased in line with Retail Price Index inflation
- Increasing the rate of air passenger duty by a further 50%
- The tax rates for private jets will increase by 50% from April 2025