This Autumn Budget is Labour’s first since reclaiming government, and contains big changes to the tax system aimed at finance vital services — including our embattled NHS. Chancellor Rachel Reeves announced UK autumn budget 2024 yesterday according to bbc, Labour delivers ‘big state’ budget focused on spending rather than cuts. In this post I take a closer look at some of the main impacts on personal and business finances, provide an analysis with expert comment.
Personal Taxes
Income tax personal allowance:
The government has decided not to not extend the freeze on income tax and national insurance thresholds beyond April 2028. From April 2028, personal tax thresholds will once again increase by the rate of inflation.
Stable Income Tax and NI rates:
There will be no increase in the income tax, employee National Insurance (NI) or VAT. Finally, it brings some stability to taxpayers in the presence of other profound changes.
Capital Gains Tax (CGT) Rises :
10% basic rate CGT on shares increased to 18%, while higher rate rose from 20% to 24%. Most of these changes will affect investors, but the rates on gains arising from properties sales are not changed suggesting a nuanced approach to asset taxation.
Business Asset Disposal Relief (BADR):
will increase to 14% from April 2025, and in April 2026 it will go up again, this time by another four percentage points making it 18% hence the increase will be rolled out gradually.
Inheritance Tax (IHT):
Extend the IHT threshold freeze to 2030 and from 2027, unspent pension pots will be subject to IHT. The proposals to limit relief for farmland from 2026 perhaps indicate a more cautious approach regarding wealth transfer, especially in respect of rural landowners and agricultural families.
From 6 April 2026 the first £1m of a claim for BPR (Business Property Relief) and APR (Agricultural Property Relief) combined will continue to be exempt from IHT. Claims for BPR and APR in excess of £1m will attract relief at 50% giving an effective rate of IHT of 20%.
There will also be relief from IHT on 50% of the value of shares held on the alternative investment market (AIM) giving an effective rate of IHT on the value of AIM shares of 20%.
VAT Amendments:
VAT will also be applied for private school tuition by January 2025, which could lead to high levels of education expenses on families.
Food for Thought:
Tax planning is more important than ever with inter-generational transfers and disposition of funds outside pension plans — especially among those who hold significant investments or have considerable assets. Revisiting asset portfolios and inheritance plans can mitigate potential tax burdens before these changes take effect. Adjustments in fees to privates schools for VAT changes may also be considered.
Non-dom tax regime
Rather than the rumoured changes, the key announcement was the abolition of the non-dom tax regime. With effect from 6 April 2025, anyone who has been UK tax resident for more than four years will be subject to UK tax on worldwide income and capital gains.
New arrivals to the UK will not be taxed at all on foreign income or gains for the first four years of residence provided they have been non-UK resident for at least the previous 10 years. Regardless of domicile, all individuals will be subject to IHT once they have been UK tax resident for 10 years.
Business Taxes
Scrapping NI Intermix and raising rates for employers:
Employers now pay 15% NI on earnings above £5,000 up from 13.8% on earnings above £9,100, resulting in an additional £4,100 potentially subject to charge at the new higher rate. The Employment Allowance will also be increased to £10,500 from 5,000 — a grateful lifeline for many small businesses.
Taxation of Private Equity:
Profits from successful deals (so-called “carried interest”) will now be taxed at 32%, these changes could have significant implications for private equity and investment industries.
Taxation of Private Equity:
Profits from successful deals (so-called “carried interest”) will now be taxed at 32%, these changes could have significant implications for private equity and investment industries.
Stable Corporation Tax:
The main rate will be maintained at 25%, providing stability for UK businesses with profits over £250k
Expert Comment:
For many businesses, Employer NI will put upward pressure on payroll costs; though some smaller firms could see an offset from the higher Employment Allowance. Higher tax on carried interest will reduce post-deal returns (important for private equity managers who may rethink investment strategies).
Wages, Benefits, and Pensions
Higher Minimum Wage:
Labour will pay lower wages to over-20s and then increase its age limit accordingly, unlike the minimum wage for those aged 25 and over now at up + £12.21 from April in all legal frameworks.
Increase in the State Pension:
he “triple lock” guarantee remains intact as basic and new state pensions will be raised by 4.1%, with this increase historically outstripping improvements to working-age benefits
Carers’ Allowance:
From May 13 more carers will be eligible as the DWP raised the threshold from £151 to £195 a week.
Expert take:
The emphasis on improving wages and benefits is intended to drive down in-work poverty, but could have implications for employment costs faced by the typical firm using minimum wage labour.
Consumer and Lifestyle Taxes
Vaping and Tobacco Taxes:
Among the new measures are a flat-rate vaping tax, higher taxes on tobacco with hand-rolling tobacco incurring an extraordinary 10% increase beyond inflation. Higher taxes on non-draught drinks, minor tax cut for draught options. If the sugar tax is extended to milk-based beverages, it will imply that public health has assumed a larger role.
Analysis:
One view is that the vaping tax marks a start of regulatory change on health risks from vaping while gradual tobacco and alcohol tax hikes are continuation. Firms in these industries should be adapting to changing consumer demand and product price ranges accordingly. Increased tobacco and alcohol excise will see significant costs added to the hospitality industry, as well as retail sector
Property and Housing
There was bad news for landlords after Vote Leave as stamp duty adjustments were introduced: the threshold is now £125,000 again on primary home purchases but second-home buyers (buy to let landlords) face a 5% surcharge up from 3%. But for first-time buyers, the threshold falls to £300,000 and takes stamp duty out of play at a point quite lower on the tier access scale.
Expert Insight:
A return to the lower stamp duty thresholds could make buying less affordable for new buyers, especially young people looking to get on the housing ladder. The additional surcharge on second homes is another cost consideration for property investors and landlords.
Conclusion
The UK Autumn Budget 2024 underscores Labour’s investment in public services and the increased taxes on capital gains and high-earning businesses, which may significantly impact both individuals and businesses in Putney, Harley Street, Battersea, Southwest London, Central London, and Wandsworth Borough. These changes highlight the need for proactive tax planning strategies, specifically targeting Capital Gains Tax (CGT), Inheritance Tax (IHT), and the anticipated rise in payroll costs. With the new business tax planning challenges introduced in the Autumn Budget 2024, it’s essential for businesses and individuals to stay informed and prepared for what lies ahead.
If you’re seeking expert guidance on what the UK Budget 2024 means for your finances, contact Lanop Business & Tax Advisors—your local experts in Putney tax planning and business tax services near me. Our team specializes in local tax advice and R&D Tax Credits, helping you optimize your financial affairs amidst these changes. Whether you’re interested in exploring CGT tax strategies, understanding business tax changes in this year’s budget, or need comprehensive advice on capital tax adjustments in Central London, our advisors are here to guide you every step of the way in today’s evolving tax world.
