Speculation has been rife in the run up to today and has caused a great deal of uncertainty for many. We’ve had to contend with rumours about capital gains tax rates increasing to match income tax rates, pension relief decreasing for higher earners, employer’s national insurance on pension contributions for staff and sweeping changes to inheritance tax and business reliefs.
We are pleased to confirm the majority of these measures were indeed just rumours, however, there have been a number of significant new changes.
Top Takeaways
Income Tax
- No increase in the rates of income tax.
- The personal allowance threshold is frozen at £12,570 until 5 April 2028 when it will increase with inflation.
- The national minimum wage will increase by 6.7% to £12.21 per hour from April 2025.
National Insurance
- Employer’s National Insurance percentage to increase from 13.8% to 15% from April 2025.
- Employer’s threshold at which NIC applies reduced from £9,100 to £5,000 from April 2025.
- However, the employer’s allowance has been increased from £5,000 to £10,500 from April 2025.
- No change to employee’s NIC threshold or rates.
Capital Gains Tax
- Rates to increase from 10% to 18% and 20% to 24% from 30th October 2024.
- Shares and commercial property will now be taxed at the same rates as residential property.
- Business Asset Disposal Relief (BADR) for the sale of a trading business will continue, although the tax rates will rise. For 2024/25 up to £1,000,000 of gains are taxed at 10%, increasing to 14% tax in 2025/26 and 18% in 2026/27.
Inheritance Tax
- The nil rate band and the residence nil rate band thresholds have been maintained at £325,000 and £175,000 respectively until 2030.
- From April 2027 pensions will be included in the calculation of a chargeable estate for IHT.
- 100% agricultural property relief (APR) and business property relief (BPR) will continue but will be capped at a combined £1,000,000 from April 2026.
- For APR and BPR assets over £1,000,000 relief is restricted to 50%.
Corporation Tax
- 25% maximum corporation tax rate will continue as long as Labour are in government.
- Annual investment allowance for capital expenditure is maintained at £1,000,000.
- Full expensing of capital expenditure continues.
- No changes to Research and Development tax relief.
VAT
- Confirmed that VAT will apply to private school fees.
- No other changes announced regarding rates or thresholds.
Stamp Duty Land Tax
- The higher rate SDLT surcharge on additional properties increases from 3% to 5% from tomorrow (31st October).
Click here for further details on the Autumn Budget 2024
We understand these changes may impact your tax planning and we are on hand to answer any queries or concerns you may have.
Please feel free to reach out to our Tax Director, Gillian Johnston on gillian.johnston@mbmcgrady.co.uk or the Partner who deals with your affairs to arrange a meeting to discuss.