5 Key Points from the UK Autumn Budget 2024: What Businesses and Individuals Need to Know

5 Key Points from the UK Autumn Budget 2024: What Businesses and Individuals Need to Know

Virtue Accountants Overview

On 30th October 2024, Chancellor Rachel Reeves delivered the highly anticipated Autumn Budget, introducing significant fiscal changes aimed at addressing the UK’s economic challenges. For UK taxpayers, business owners, and investors, there are some notable updates that could affect financial planning for years to come. Here Virtue Accountants' breakdown of the five key highlights and their impact.

1. Increase in Employer National Insurance Contributions (NIC)

One of the most impactful changes in the Autumn Budget is the increase in Employer National Insurance Contributions (NIC), affecting businesses across the UK. From April 2025, the NIC rate will rise from 13.8% to 15% on wages exceeding £5,000, down from the previous threshold of £9,100. This adjustment will remain in effect until April 2028 and is expected to generate £25 billion for the Treasury.

For many small businesses, this change could mean a considerable rise in operating costs, especially for those not eligible for Employment Allowance relief. The Chancellor has, however, doubled the Employment Allowance to £10,500 and removed the £100,000 cap, potentially benefiting a wider range of employers. [HM Treasury, NIC Changes Autumn Budget 2024]

2. Higher Capital Gains Tax (CGT) Rates on Assets

Updates to Capital Gains Tax (CGT) rates also top the list of significant budget changes. While CGT on residential property stays at 18% for basic rate taxpayers and 24% for higher rate taxpayers, other asset categories, such as shares, will now attract higher rates.

From April 2025, the CGT rate on carried interest is set to increase to 32%, potentially impacting those with private equity investments. Business Asset Disposal Relief (BADR), essential for business owners planning retirement, has also seen rate increases and a reduced lifetime cap from £10 million to £1 million, aligning with Investors’ Relief. These changes underscore the importance of early tax planning to minimise tax liabilities. [GOV.UK, CGT Updates]

3. Stamp Duty Land Tax (SDLT) Increases for Additional Properties

From 31st October 2024, the Stamp Duty Land Tax (SDLT) surcharge for additional properties in England has increased from 3% to 5%. This affects second homes, rental properties, and dwellings bought for investment. Additionally, corporate bodies purchasing dwellings over £500,000 will see SDLT rise to 17%, up from 15%.

This adjustment could deter some property investors, especially in a climate of rising interest rates, while also impacting landlords and second-home buyers. Investors should assess their options carefully before making property purchases to ensure they’re not hit with unexpected SDLT costs. [GOV.UK, SDLT Adjustments]

4. Inheritance Tax (IHT) Adjustments and Extended Threshold Freeze

With the IHT nil-rate band frozen until April 2030, Inheritance Tax (IHT) will continue to apply at a rate of 40% for estates exceeding £325,000. The additional nil-rate band for primary residences, currently at £175,000, also remains unchanged, allowing some estates up to £1 million in combined relief for certain married couples.

From April 2026, the scope of Agricultural and Business Property Relief is limited to the first £1 million of business or agricultural assets at 100% relief, with only 50% relief for amounts above this. This change may increase IHT liabilities for farms and family-owned businesses, highlighting the need for thorough estate planning. Virtue Accountants can help assess the potential IHT impacts and develop strategies to maximise tax efficiency. [HM Treasury, Inheritance Tax Adjustments]

5. VAT on Private School Fees

Starting 1st January 2025, VAT on private school fees will be set at the standard 20% rate, aligning private educational fees with other VAT-liable services. Anti-forestalling measures mean that any fees paid in advance for terms starting after January 2025 will be subject to this VAT charge.

While private schools in England will also lose charitable business rate relief from April 2025, the Government has stipulated that pupils with special educational needs in private schools, where placements are funded by local authorities, will receive VAT compensation. This change may impact families considering private education, and Virtue Accountants can help families and trusts manage the new expenses tied to educational planning. [GOV.UK, VAT on Education Services]

Stay Updated on Financial Legislation Changes

These five points represent some of the most significant changes from the Autumn Budget 2024, each likely to influence financial decisions for both individuals and businesses in the UK. At Virtue Accountants, we provide tailored advice to help you navigate these legislative changes, optimise your tax strategy, and plan for a stable financial future.

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