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Autumn Budget 2024 Breakdown

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The UK Autumn Budget 2024, delivered by Chancellor Rachel Reeves, introduced several key changes to the tax system affecting various groups, including limited companies, sole traders, high-net-worth individuals, employees, and employers. Here’s a categorised summary of the main changes.

Disclaimer: Please use this post as a guide and refer to any links throughout, or at the end of, this guide. Note that the information contained in this guide is provided solely for information purposes and should not be taken as legal advice. Although we try to keep everything up to date, the tax system is ever-changing and it is best to consult a professional regarding your own personal circumstances.

Last updated: November 2024

Limited Companies

1. Corporation Tax

  • Capped at 25%, maintaining the UK’s position as having the lowest rate in the G7.
  • Targeted incentives, such as tax credits for visual effects (VFX) and video game expenditures.

2. Capital Allowances

  • 100% first-year allowances extended for zero-emission vehicles and electric vehicle charging points until 2026.
  • Encourages investment in environmentally sustainable infrastructure.

Employers

1. Employer NICs

  • Increased by 1.2 percentage points to 15%, starting April 2025.
  • Threshold reductions (to £5,000) will impact total employer contributions.

2. Employment Allowance

  • Increased from £5,000 to £10,500, enabling small businesses to offset higher NIC costs.
  • Removal of the £100,000 earnings threshold, extending eligibility to more businesses.

3. Support Measures

  • 865,000 small businesses exempt from NICs due to the increased Employment Allowance.

Employees

1. National Insurance Contributions (NICs)

  • Threshold reduced from £9,100 to £5,000, increasing NIC liabilities for employees.

2. Company Car Tax

  • Continued support for electric vehicles through lower taxation, encouraging greener choices.

3. Living Wage

  • National Living Wage raised to £11.10 per hour, benefiting low-income workers.

Capital Gains

1. Capital Gains Tax (CGT)

  • Basic rate increased from 10% to 18%, higher rate from 20% to 24%, effective April 2025.
  • The annual CGT exemption remains frozen at £3,000 (down from £12,300 in 2023).

2. Business Asset Disposal Relief

  • CGT rate on eligible gains increases to 14% by April 2025, reaching the main lower rate of 18% by April 2026.
  • This phased approach provides small business owners time to adapt.

Individuals

1. Inheritance Tax (IHT)

  • Unused pension pots passed to heirs are now subject to IHT, reducing a key tax shelter for high-value estates.
  • Agricultural Property Relief and Business Property Relief rules tightened, limiting their application to high-value estates and making the system less generous for wealthy individuals.

2. Non-Domiciled Tax Regime

  • The non-dom tax regime is replaced with a residence-based system, ensuring UK residents pay taxes locally on worldwide income, closing a key tax avoidance strategy for wealthy individuals.

3. Stamp Duty Land Tax (SDLT)

  • Higher rates for additional properties increased from 3% to 5%, effective October 31, 2024.
  • Aims to deter speculative property purchases.

Sources

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