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This article summarises what you need to know about the government’s Autumn Budget 2024, in A-Z order of topics for your easy reference.
Overall, the budget will mean a £40billion tax hike for the country, which the government believes is necessary to address a £22billion budget gap, invest in essential public services and stabilise the government’s finances.
The budget has received a mixed response, with some supporting these measures to fund investment healthcare, education and infrastructure, and others concerned about the impact of higher taxes on households and businesses and how they could potentially slow down economic growth and investment.
Our experienced team of financial advisers at PIL Southampton is here for you, to talk through how the changes that have been announced could affect your financial situation.
We can advise you on adjustments you might want to consider making to your financial arrangements, in response to the Autumn Budget.
Basic-rate taxpayers had been paying 10% on profit made from selling a property or other asset above the threshold, and higher-rate taxpayers were paying 20%.
On 30 October 2024, these rates increased to 18% and 24% respectively, which is in line with the unchanged residential property rates. Trustees and personal representatives pay the higher rate of 24%.
The Annual Exempt Amount of £3,000 hasn’t changed.
From 6 April 2025, Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will rise from 10% to 14%, and to 18% from 6 April 2026. The IR lifetime limit remains at £1million and the tax rate for carried interest will increase from 18% and 28% to 32% from April 2025, pending full reform.
The government has published a Corporate Tax Roadmap that sets out their plans and highlights several areas where they will be exploring change. The roadmap includes a commitment to cap the Corporation Tax Rate at 25%, and to keep the Small Profits Rate and marginal relief at the current rates and thresholds.
The beneficial treatments that furnished holiday let landlords have enjoyed are stopping in April 2025.
The four key points are:
1) loan interest will be restricted to basic rate for income tax.
2) access to reliefs from taxes on chargeable gains for trading business assets is being withdrawn.
3) people will no longer be able to include this income as relevant UK earnings when they are calculating maximum pension relief.
4) capital allowance rules for new expenditure and the allowance of replacement of domestic items relief are being removed.
The government is not changing the current system and will not be basing the HICBC on household income.
From April 2028, the freeze on income tax thresholds is being lifted. From that date, they will increase in line with inflation.
The inheritance tax threshold freeze, that was already locked-in to April 2028, has been extended to April 2030, so the £325,000 nil rate band and £175,000 residence nil rate band will be maintained for another five years.
Qualifying estates will be able to continue to transfer unused nil rate bands to the surviving spouse, which means that up to £1,000,000 of wealth can be transferred without incurring inheritance tax liability.
Agricultural property relief and business relief rules are changing from April 2026. From then, the current 100% relief on qualifying agricultural and business assets will be limited to the first £1million of combined assets. Any additional assets will attract 50% relief, paying 20% inheritance tax.
The relief on unlisted shares is also being reduced, it is now only 100% on the first million with 50% thereafter. This means that a 20% inheritance tax rate will apply on eligible assets above the value of £1 million.
In the 2027-28 tax year, the inheritance tax service is going digital, providing an online service that will hopefully make the process easier and faster.
The annual subscription limits of £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds are staying as they are until 5 April 2030.
The British ISA is not going ahead.
The National Living Wage will increase on 6 April 2025 from £11.44 per hour to £12.21 per hour.
Individual NI rates aren’t changing, but an increase in employers’ rates will be taking effect from 6 April 2025, rising from 13.8% to 15%. The point at which employers are liable to pay NICs, known as the Secondary Threshold, is reducing from the current £9,100 per year to £5,000 per year from 6 April 2025. From then on, it will increase by CPI.
To assist small businesses who will need to pay these extra costs, Employment Allowance will increase from £5,000 to £10,500 and the £100,000 threshold for eligibility is being removed from 6 April 2025, expanding to all eligible employers with employer NICs bills.
From 6 April 2025, domicile tax status is being replaced with a residence-based regime. People will no longer be able to use offshore trusts to protect assets from inheritance tax.
At the same time, they will also be abolishing the remittance basis of taxation for non-domiciled individuals. Instead, people can choose to opt in to an internationally competitive regime that will include not paying UK tax on foreign income and gains (FIG) for their first four years of tax residency.
To encourage individuals to spend their FIG in the UK, the government is extending the Temporary Repatriation Structure to three years, simplifying the mixed fund rules and expanding the scope to include offshore structures.
From a Capital Gains Tax perspective, current and past remittance basis users will be able to rebase foreign assets that they’ve held personally to 5 April 2017 on a disposal, if they meet certain conditions.
Overseas Workday Relief is staying and changing – relief is being extended to four years and the need to keep the income offshore is being removed. The amount that an employee can claim will be limited to £300,000 or 30% of the employer’s net employment, whichever annual amount is lower.
The amount of tax-free cash that an individual can receive is not being reduced.
The biggest change to pensions is that, from 6 April 2027, the majority of unused pension funds and death benefits will be included in the value of someone’s estate for IHT purposes. This proposed legislation will go through a rule-drafting and consultation phase so the detail will only be known later.
HMRC is intending for pension schemes to report and pay IHT that’s due, and they have started a consultation process that they will review and carry out a technical consultation on draft legislation in 2025.
It is generally thought that the new system will increase the time it takes for payments to be processed, due to the additional information exchanges that will be required between a pension scheme and the representatives of the deceased’s estate.
These changes will apply to both defined contribution and defined benefit registered pension schemes, and to Qualifying Non-UK Pension Schemes. Certain pension benefits will stay outside the scope of IHT, including charity lump sum death benefits and dependants’ scheme pensions.
It is being proposed that, if Pension Schemes don’t pay the IHT charge within six months of the end of the month of the death, they will start accruing late payment interest on the IHT due from the pension funds.
Out of scope of these changes are all life policy products bought with pension funds or as part of an employer’s pension package.
From 1 January 2025, the fees for private education and boarding provision will be subject to the standard 20% VAT rate.
Local authorities and devolved governments funding places for pupils with special educational needs will be provided with funds to cover the increase in fees due to the applied VAT, to ensure that those pupils will continue to have their educational needs met.
Although there was no announcement in the Autumn budget to extend the current stamp duty thresholds that were temporarily implemented in September 2022, we know that they are due to decrease on 1st April 2025:
These changes will affect first-time buyers the most.
In addition, the higher rates for Additional Dwellings of Stamp Duty Land Tax (SDLT) increased from 3% to 5%. This rate applies to purchases of second homes, buy-to-let residential properties and to companies buying residential properties.
It is hoped that this rate increase will give people who are buying a home to live in an advantage over those buying extra properties.
The Starting Rate for Savings isn’t changing, so it will stay at £5,000 for the 2025-26 tax year. This means that anyone earning less than £17,570 (in earnings and/or pension income) can receive up to £5,000 of savings interest without being charged tax on that amount.
Our expert team of financial advisers is here to talk you through any of the detail in the Autumn Budget, and to discuss any action you may want to consider taking to make sure you are being as tax efficient as possible, and to keep your financial plans on track.
You can email us, fill out the contact form on our website or call us on 02380 668407. We look forward to hearing from you.
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