Key Updates from the Autumn Budget

We wanted to share some important updates from the Autumn Budget 2024 that may impact your financial planning.

These changes represent significant shifts in the tax landscape, and we are committed to navigating them with you. If you have any questions or need further clarification on how these updates may impact your financial planning, please feel free to reach out. We are here to support you every step of the way.

National Living Wage and Minimum Wage Increases:

• The National Living Wage will increase by 6.7% from £11.44 per hour to £12.21 per hour from April 2025.
• For 16-17-year-olds (including apprentices), the minimum wage will increase by 18% to £7.55 per hour.
• For 18-20-year-olds, the minimum wage will increase by 16% from £8.80 per hour to £10 per hour.

Employer National Insurance Contributions (NICs):

• Employers’ NICs will increase by 1.2 percentage points to 15%, with the threshold reduced from £9,100 to £5,000 from April 2025.
• The Employment Allowance will increase from £5,000 to £10,500, benefiting small businesses.

Capital Gains Tax (CGT):

• CGT rates will rise from 10% to 18% and from 20% to 24%, aligning with property CGT rates from 30 October 2024 – this was a pleasant surprise, we expected rates to increase more.
• The Business Asset Disposal Relief (BADR) (aka Entrepreneurs relief) rate remains at £1 million and 10% for now but will increase to 14% in 2025/26 and then to 18% in 2026/27 – this is a shame for those selling companies in the coming years, and proved why we need to create financial independence away from our company value ‘my company is my pension’ isn’t sound planning.
• Carried interest rates for Private Equity investments will jump to 32% in April 2025, with further reforms in 2026.

Inheritance Tax (IHT):

• Inheritance Tax thresholds (£325,000 nil rate, £175,000 residence nil rate) will remain the same but are frozen until 2030.-
• Business Property Relief and Agricultural Property Relief will be capped at 50% on values over £1 million from April 2026 i.e. This was a surprise, you will now pay IHT on your company or farm value at 20% when you die
• AIM shares will be taxed at 20% IHT.
• Inherited pensions will be included in the inheritance tax regime from April 2027 – this is a shame and will require some additional planning when the details are released.

Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) Reliefs:

• VCT and EIS reliefs are secured until 2035, and dividend tax rates remain unchanged.

Tax Incentives for Electric Vehicles:

• Tax incentives for electric vehicles will continue until 2026.

Corporation Tax:

• Corporation tax rates will remain unchanged throughout this Parliament, with the Annual Investment Allowance (AIA) and full expensing kept for capital allowances.

Stamp Duty Land Tax (SDLT):

• SDLT on second homes is set to rise to 5% from tomorrow – this is a blow to those wanting to purchase a second home.

Non-Domicile (Non-Dom) Tax Regime:

• The non-dom tax regime will be removed in April 2025, with a three-year favourable repatriation phase.

Value Added Tax (VAT) on Private School Fees:

• VAT on private school fees will start from January 2025 – a shame they didn’t wait until the start of the new school year in September, to allow parents to plan appropriately.

Income Tax Thresholds:

• Income tax thresholds will begin rising with inflation from 2028/29.

Business Rates:

• The current 75% discount on business rates will be replaced with a 40% discount, up to a maximum of £110,000 total discount.