The Labour Party delivered its first budget in 14 years on Wednesday 30th October 2024. Delivered by Chancellor Rachel Reeves, the latest budget pledged to restore economic stability and expand opportunities for small and medium enterprises to grow, with tax changes forecast to raise £40 billion and inflation estimated to decrease to 2.0% by 2029. Here is a summary of the key tax changes that were announced in Parliament.
Capital Gains Tax
- Capital Gains Tax (CGT) will see an increase from 10% to 18% for lower rates and an increase for higher rates from 20% to 24% from 30th October.
- The rates on residential property will remain at 18% and 24%.
- Business Asset Disposal Relief (BADR) will also remain at £1 million of lifetime gains, but the rates are due to increase to 14% from April 2025 and 18% from April 2026.
National Insurance and personal taxes
- Employers’ National Insurance (NI) contributions will rise from 13.8% to 15%.
- In addition to this, the threshold at which businesses start paying NI on a worker’s earnings will be lowered from £9,100 to £5,000, with the overall changes forecasted to raise £25 billion.
- The Employment Allowance will also be increasing, to support the growth of smaller businesses, from £5,000 to £10,500.
- The freeze on NI, VAT and Income Tax contribution thresholds will remain in place until 2027/28.
Inheritance Tax
- The Inheritance Tax (IHT) threshold freeze has been extended a further two years until 2030.
- From April 2026, the first £1 million of combined Business and Agricultural assets will continue to attract no IHT, but assets over £1 million will only attract BPR at 50%.
- Unspent pension pots will also be subject to IHT from April 2027
Domicile Status
- From April 2025, the government will be abolishing non-dom status and replacing it with a residence-based regime, bringing foreign earnings into the inheritance tax system.
Stamp Duty Land Tax
- The government will be increasing the Stamp Duty Land Surcharge for second homes, with effect from tomorrow (Thursday 31st October 2024), from 3% to 5%.
Wages and pensions
- The legal National Living Wage will increase from £11.44 to £12.21 per hour from April for over-21s.
- The rate for 18 to 20 year-olds will go up from £8.60 to £10, which is part of a long-term plan to move towards a ‘single adult rate’.
- Basic and new state pension payments are to go up by 4.1% next year.
Investment areas
- The Chancellor confirmed funding for various sectors to aid in growth and innovation, with £1 billion confirmed for the aerospace sector, over £2 billion for the automotive sector and up to £520 million for a new Life Sciences Innovative Manufacturing fund.
- More than £20 billion will be funded into the science sector, with at least £6.1 billion protecting core research funding for areas such as engineering, biotechnology and medical science.
Fuel duty
- The 5p cut in fuel duty, due to end in April 2025, has been kept on for another year.
If you would like further information or tailored advice regarding the key changes announced in the Autumn Budget 2024, get in touch with us to discuss your needs with one of our specialist tax team.
