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Autumn 2024 – Labour Budget Update

On 30th October 2024 the new Labour government unveiled their Autumn 2024 budget. The budget covered a vast array of topics such as public spending, housing, transport, investment and taxes.

In this guide we intend to highlight the specific measures implemented that are going to impact our clients: individuals and small business owners.

For a full view of all areas of the budget please refer to the budget document here.

Over the coming days, as we digest and calculate the impact of the  changes, we will complete a more detailed analysis showing specific examples and sharing key impacts.

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The Highlights:

Personal Tax

  • Rates of Income Tax and National Insurance (NI) paid by employees have remained unchanged
  • Income Tax band thresholds are to rise in line with inflation after 2028
  • Basic rate Capital Gains Tax on profits from selling shares will increase from 10% to 18%, with the higher rate rising from 20% to 24%
  • Rates on profits from selling additional properties are unchanged
  • Subscription limits for Adult ISAs, Junior ISAs and Child Trust Funds will be maintained at current levels

Business Tax

  • Companies to pay NI at 15% on salaries above £5,000 from April 2025, up from 13.8% on salaries above £9,100
  • Employment Allowance – which allows companies to reduce their NI liability is to increase from £5,000 to £10,500
  • Main rate of corporation tax, paid by businesses on taxable profits over £250,000, to stay at 25% until next election
  • The Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) rate will increase from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026.
  • 100% first-year allowances for zero-emission cars and electric vehicle charge-points extended to 31 March 2026 for Corporation Tax and 5 April 2026 for Income Tax

Wages & Pensions

  • Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April 2025
  • Rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a “single adult rate”
  • Basic and new state pension payments to go up by 4.1% next year due to the “triple lock”

VAT, Stamp Duty, Inheritance Tax & Other

  • The standard rate of VAT (20%) will apply to education and boarding services provided by private schools from 1 January 2025.
  • There will be an increase to the Higher Rates for Additional Dwellings surcharge on Stamp Duty Land Tax (SDLT) from 3% to 5%. It will also increase the single rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 by corporate bodies from 15% to 17%.
  • From 6 April 2027 unused pension funds and death benefits payable from a pension will be brought into a person’s estate for Inheritance Tax (IHT) purposes.
  • The Government will increase the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5% to Bank Rate plus 4%.
  • Fully electric and zero emission vehicle rates will increase by 2% per annum across 2028-29 and 2029-30. Rates for cars with emissions of 1-50g/km of CO2 will increase to 18% in 2028-29 and 19% in 2029-30. Rates for all other emission bands will increase by 1% per annum to maximum of 38% for 2028-29 and 39% for 2029-30.
  • Section 455 ‘Loans to Participators’ legislation will be amended to prevent close companies recycling loans through two or more companies to avoid tax.
  • From 1 April 2025, 40% business rates discount (currently 75% discount) available to businesses occupying eligible retail, hospitality and leisure properties in England, up to a cash cap of £110,000 per business for one year. The small business multiplier will be frozen at 49.9p for 12 months.
  • Confirmation of the payrolling of employment benefits from April 2026
  • HMRC to recruit 5,000 additional compliance staff by 2029-30
  • HMRC to recruit 1,800 additional debt management staff

Disclaimer: This newsletter covers the key news headlines from Budget 2024. The authors take great care in its production, but it is not exhaustive and should not be read as a full fiscal summary. The content displayed is correct as of 30 October 2024. We cannot take responsibility for any action taken or not taken from this document alone. Please contact us for personalised advice.