Business News

Autumn Budget 2024

05/11/2024

On Wednesday 30th October, The Chancellor, Rachel Reeves unveiled Labour's first budget in 14 years'.

It’s a fact that all budgets are political, and yesterday’s budget wholeheartedly proved that. The last few weeks have seen daily commentary about what was to be announced and took advantage of the fact that it would be the day before Halloween.  Was it ‘spooktacular’ – I think so.

Our budget report is a much heftier document than usual, we’ve outlined a few stand-out headlines below:

Employer National Insurance

The repeatedly touted rise in employer National Insurance (NI) is probably the headline grabber and there is no doubt that this will absolutely cause businesses to have a good hard think about increasing staffing levels. Today we are already hearing that this may result in much slower economic growth in the long term. The blow is softened by increasing the Employment Allowance (essentially a waiver of employers’ NIC) from £5,000 to £10,500: at the same time, the rule restricting eligibility for Employment Allowance to smaller employers is removed.

Capital Gains Tax and reliefs

As expected, rates of Capital Gains Tax (CGT) are increased, though not perhaps by as much as some had predicted. As of yesterday, the rate for basic-rate taxpayers increases from 10% to 18% and for higher-rate taxpayers from 20% to 24%, bringing them in line with rates on residential property (which remain unchanged).

As for CGT Business Asset Disposal Relief (BADR), from 6 April 2025 the rate of tax increases to 14% and from 6 April 2026 to 18%. Its currently 10%. If you are a person with significant control (PSC) looking to close via a members voluntary liquidation (MVL) then best get a wiggle on.

Inheritance Tax, reliefs and pensions

Major changes are announced to Inheritance Tax (IHT), though the Nil Rate Band and the Residence Nil Rate Band remain unscathed (albeit frozen until 2030) and there are no changes to the rules on Potentially Exempt Transfers.

Business Property Relief (BPR) and Agricultural Property Relief (APR) are ‘reformed’ from 6 April 2026.  While the existing 100% reliefs continue for the first £1m of combined agricultural and business property, thereafter the rate of relief will be 50% but the uplift to market value which applies for CGT purposes on death, which some had feared would be removed, remains.

The other major change to IHT is that from 6 April 2027, the balance of any pension fund unused at the date of death (and death benefits payable by a pension scheme) will be brought into the pension owner’s estate for IHT purposes.  This is obviously aimed at countering the use of pension schemes as IHT planning strategies, rather than as a way to fund retirement.

One side effect of the inclusion of a pension fund in the IHT estate is that it may in many cases have the result that the total estate now exceeds £2m, thus reducing the “residence nil rate band” by £1 for every £2 of the excess.  Thus, the pension fund may not only itself be taxable, but its inclusion may increase the tax payable on the remainder of the estate.

Property: Stamp Duty Land Tax

The chipping away at landlords of residential property continues.  Where the additional rate of Stamp Duty Land Tax (SDLT) is payable on purchases of additional dwellings (whether as second homes or for letting), this increases from 31 October 2024 by 2% to 5%.

Late payment interest rates on unpaid tax liabilities

Easy to miss was the Chancellor’s mention of interest on late paid tax.  From 6 April 2025 the 7.5% interest rate will be increased by 1.5%. This could impact small and medium sized businesses with cashflow issues.

There is much more to digest, so I hope you find the time to read through the budget report below. As ever we are here to answer any questions and help with making or changing plans for both your business and you so do get in touch.