Top 12 Things to Know from the Autumn Budget 2024
1. Increase in National Living Wage: The government has increased the National Living Wage to £12.21 per hour, benefiting over 3 million workers across the UK. This increase aims to ease cost-of-living pressures, but businesses will need to prepare for the associated payroll adjustments.
2. Changes in Employer NICs: From April 2025, employer National Insurance contributions (NICs) will increase by 1.2 percentage points to 15%. The per-employee threshold at which NICs are payable will also be lowered. Small businesses will benefit from an increased Employment Allowance, which rises to £10,500.
3. New Fiscal Framework: The government has introduced a new fiscal framework, including a "Stability Rule" to balance the current budget and an "Investment Rule" to reduce net financial debt. These measures are aimed at stabilising the public finances.
4. Capital Gains Tax (CGT) Increase: Both the lower and higher rates of CGT will increase to 18% and 24%, respectively. Business owners taking advantage of Business Asset Disposal Relief will also see changes, with rates gradually increasing until they align with the main CGT rate in 2026.
5. Corporate Tax Cap: The government has committed to capping Corporation Tax at 25% for the remainder of the current Parliament, making it the lowest rate in the G7, providing stability for businesses in terms of tax planning.
6. Changes to Business Rates: Retail, hospitality, and leisure businesses will benefit from a freeze in the small business multiplier and a 40% relief on bills from 2026-27. These measures aim to provide much-needed relief to sectors hit hardest by recent economic challenges.
7. Welfare Reforms and Cap: The Budget introduced a new welfare cap for 2029-30, focusing on reducing fraud and error within the welfare system. The government aims to save £4.3 billion per year by tightening control measures.
8. Pension Adjustments: Inheritance tax will now apply to unspent pension pots, which could change retirement planning strategies for many clients. This is part of broader efforts to ensure that the wealthiest estates contribute a fair share.
9. Changes to the taxation of non-UK domiciled individuals :The government will legislate to abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler and internationally competitive residence-based regime, which will take effect from 6 April 2025. Individuals who opt-in to the regime will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence. From 6 April 2025 the government will introduce a new residence-based system for Inheritance Tax (IHT), ending the use of offshore trusts to shelter assets from IHT, and scrap the planned 50% reduction in foreign income subject to tax in the first year of the new regime.
10. Stamp Duty Changes: The government is increasing the Higher Rates for Additional Dwellings (HRAD) in Stamp Duty Land Tax from 3% to 5% on the purchase of second homes, buy-to-let properties, and properties bought by companies. This increase takes effect immediately and is aimed at addressing housing affordability by discouraging multiple property ownership.
11. Carried Interest Taxation Reform: The government is reforming the tax treatment of carried interest. The changes will ensure that carried interest is taxed as income rather than capital gains, aligning with other income tax rates. This reform aims to make the tax system fairer and ensure that investment managers pay their fair share, impacting private equity and venture capital professionals.
12. VAT on Private School Fees: As expected, VAT will be introduced on private school fees, effective immediately. This is part of the government's broader initiative to raise funds to support state education.
