UK Autumn Budget 2024: What you need to know

Virtue Accountants Analysis

The Autumn Budget 2024, delivered by Chancellor Rachel Reeves on 30th October, outlines sweeping tax reforms that will significantly impact UK businesses and individuals. From increased National Insurance Contributions (NIC) to updated Capital Gains Tax (CGT) rates, these changes are likely to affect a wide range of financial and business planning decisions. Virtue Accountants are here to help you navigate these changes and optimise your tax strategy.

Key Announcements in the Autumn Budget 2024

Employer National Insurance Contributions Increase

One of the standout changes in the Autumn Budget 2024 involves an increase in employer National Insurance Contributions (NIC) for businesses. From April 2025, the employer NIC rate will rise from 13.8% to 15% for wages paid over £5,000, a threshold down from £9,100, which remains frozen until April 2028. The Government expects these changes to generate approximately £25 billion to support the Treasury.

In response, Employment Allowance for eligible employers will double from £5,000 to £10,500 in April 2025. This higher allowance and the removal of the £100,000 cap will be available to all eligible businesses. For many small businesses, this will bring much-needed relief. However, companies with only one employee—particularly single-director companies—will not benefit from the increased allowance and may experience a rise in NIC expenses. [HM Treasury, Autumn Budget 2024]

Capital Gains Tax Changes

The Budget introduces higher Capital Gains Tax (CGT) rates that affect business owners, investors, and those with property gains. Key rates on residential property remain unchanged at 18% for basic rate taxpayers and 24% for higher rate taxpayers. However, other assets will be taxed at 18% and 24%, depending on the taxpayer’s bracket. Additionally, from April 2025, carried interest will face a CGT rate hike to 32%.

For business owners planning a sale or retirement, Business Asset Disposal Relief (BADR) is also impacted. BADR rates will rise from 10% to 14% in 2025, eventually aligning with the general CGT rate by 2026. The lifetime allowance for BADR and Investors’ Relief will reduce to £1 million for all qualifying disposals after 30th October 2024. These changes are vital for anyone looking to exit their business and require careful planning to maximise relief benefits. [GOV.UK, Capital Gains Tax Updates]

Stamp Duty Land Tax (SDLT) Adjustments – England

For those investing in additional properties, Stamp Duty Land Tax (SDLT) has increased from 3% to 5% on secondary homes, rental properties, and investment dwellings in England, effective 31st October 2024. Purchases of dwellings over £500,000 by corporations will also face a surcharge increase, now taxed at 17% rather than the previous 15%. These changes may impact investment property returns and are worth factoring into purchase decisions for the coming year. [GOV.UK, SDLT Rates]

Inheritance Tax (IHT) Freezes and Relief Limitations

The Autumn Budget has extended the Inheritance Tax (IHT) nil-rate band freeze until April 2030. The £325,000 personal threshold, with an additional £175,000 residence nil-rate band, remains unchanged.

Further, significant changes to Agricultural and Business Property Relief are anticipated from April 2026. The current 100% IHT relief will be limited to the first £1 million of business or agricultural assets, after which the relief reduces to 50%. Additionally, unlisted shares are expected to receive only 50% relief, impacting the way unlisted company owners manage their IHT planning. Virtue Accountants offers personalised IHT planning services to help manage these complexities. [HM Treasury, IHT Amendments]

Changes to National Minimum Wage and Income Tax Thresholds

As part of a broader aim to increase support for workers, the National Minimum Wage will increase by 6.7% to £12.21 per hour from April 2025 for those aged 21 and over. For employees aged 18-20, the rate will rise by 16.3% to £10.00. These changes represent a continued commitment to wage growth, though businesses will need to budget for higher wage costs in the coming years.

Additionally, the Income Tax and National Insurance Contribution thresholds are frozen until March 2028. From April 2028, they will be adjusted annually for inflation, offering some long-term stability for tax planning. [HMRC, National Minimum Wage]

Planning for Autumn Budget Changes with Virtue Accountants

These Autumn Budget updates could influence financial planning decisions for many UK individuals and businesses. Virtue Accountants is here to provide guidance tailored to your needs, helping you navigate these changes and optimise your tax strategy. Reach out to discuss how these changes may impact you, and sign up for our newsletter to stay updated on further developments.

For more personalised advice, please contact Virtue Accountants at [email protected] or call us on 01733 639076.