The Autumn Budget announcement for 2024 has brought several significant changes and updates that will affect businesses, individuals, and various sectors across the UK. Here's a comprehensive overview of the key points from the budget that you need to know.
Employee Pay
In a move that will impact workers, there will be no changes to National Insurance Contributions (NICs), VAT, or Income Tax for employees. However, the current freeze on Income Tax thresholds will continue until 2028/29. After this period, thresholds will be adjusted in line with inflation, offering some relief for taxpayers in the coming years.
Employer National Insurance Contributions (NICs)
For employers, there are crucial updates to NICs:
Increase in Employers NICs: Starting from April 2025, Employer NICs will increase by 1.2%, reaching 15%.
Reduction of the Secondary Threshold: The threshold at which employers start paying NICs for employees will decrease from £9,100 to £5,000.
Higher Employment Allowance: The employment allowance, which provides relief for smaller businesses, will increase from £5,000 to £10,500, helping alleviate some of the financial burden on employers.
Capital Gains Tax
The budget introduces significant changes to Capital Gains Tax (CGT):
The lower rate will rise from 10% to 18%, while the higher rate will increase from 20% to 24%, effective immediately.
Rates for residential property Capital Gains Tax will remain at 18% and 24%.
Business Asset Disposal Relief (previously known as Entrepreneur's Relief) will stay at 10% but will increase to 14% in April 2025 and to 18% in April 2026. Notably, the lifetime limit of £1 million remains unchanged.
Inheritance Tax (IHT)
Changes to Inheritance Tax include:
The freeze on the nil-rate band will be extended until 2030, keeping the standard threshold at £325,000. This threshold will rise to £500,000 when a main residence is passed on to direct descendants.
Starting from April 2027, IHT will also apply to inherited pensions.
Business Property Relief (BPR) and Agricultural Property Relief (APR) will maintain their 100% relief for assets up to £1 million, but any excess will reduce to 50% starting in April 2026.
Corporate Tax (CT)
Corporation Tax rates will remain unchanged, with no new provisions introduced. Notably:
The current provisions for full expensing (allowing businesses to deduct capital investments) and the Annual Investment Allowance will continue without changes.
Research and Development (R&D) relief rates will also remain the same, supporting innovation across industries.
Second Home Surcharge
A significant update for property investors is the increase in the Stamp Duty Land Tax (SDLT) surcharge on second homes, which will now rise to 5%, effective immediately.
VAT on Private School Fees
Starting in April 2025, VAT will be introduced on private school fees, impacting parents considering private education for their children.
Non-Dom Tax Status
A noteworthy shift is the abolition of the non-domiciled tax status, effective April 2025. This status will be replaced by a residence-based tax system, potentially affecting the tax obligations of many high-net-worth individuals living in the UK.
Conclusion
The Autumn Budget 2024 has outlined several key changes that will influence both individuals and businesses. It's essential to stay informed and plan accordingly to navigate these new financial landscapes effectively. As always, consulting an accountant can help clarify how these changes may impact your specific situation.
Comments