This was a huge budget and not only because there were a number of tax increases but because it was the first Labour budget in over 14 years and the first ever budget read by a female Chancellor. It is great to see women in such a leadership role.
Regarding the budget there were a number of areas where changes have taken place.
As it was so exhaustive, I have noted these down as sections below.
EMPLOYERS
Increase in employers NIC from 13.8% to 15% from April 2025.
Employers NIC to start being paid from £5,000 instead of £9,100 = £615 per employee.
Frozen levels until 2028.
Increase in employment allowance from £5,000 to £10,500.
EMPLOYEES
Personal allowances and NI allowances to be frozen until 2028. From 2028/2029 these allowances will be updated in line with inflation.
National Living Wage rates to be increased from April 2025.
Aged 21 and over up to £12.21 per hour from £11.44 per hour.
Aged 18-20 up to £10.00 per hour from £8.60 per hour.
Under 18s and apprentices up to £7.55 per hour from £6.40 per hour.
STATE PENSION
The triple lock is to remain and state pension rates will increase from 06.04.2025.
Old state pension rate will increase from £169.50 per week to £176.45 per week.
New state pension rate will increase from £221.20 per week to £230.25 per week.
CAPITAL GAINS TAX
Increase of capital gains tax from 30.10.2024.
Basic taxpayers’ rate increases from 10% to 18%.
Higher taxpayers’ rate increases from 20% to 24%.
CGT – Business Asset Disposal Relief – from 06.04.2025 rate increases to 14% and from 06.04.2026 to 18%. Current rate is 10%.
£1m allowance remains for these rates.
Annual CGT exemption remains at £3,000.
INHERITANCE TAX
Nil rate band and residence nil rand band remain the same.
Business Property Relief (BPR) and Agricultural Property Relief (APR) are reformed from 06.04.2026.
100% relief for first £1m, thereafter rate of 50% relief.
From 06.04.2027, balance of a pension fund unused will be added to the estate.
Bear in mind the inclusion of a pension fund in IHT may take an estate over £2m and therefore reduce use of residence nil rate band.
HIGH INCOME CHILD BENEFIT CHARGE
Not proceeding with reform calculation on household income.
From 2025, employees will be able to pay high income charge through their tax code so no need for a tax return to be filled in.
NON-UK DOMICILE TAX REGIME
Rachel Reeves branded this concept as outdated.
From 06.04.2025, the remittance basis is to be abolished and replaced with a residence-based regime.
Complex transition rules will be introduced.
STAMP DUTY
Additional rate of stamp duty for second properties to increase from 3% to 5% from 31.10.2024.
Purchases by corporates of properties over £500,000 will pay stamp duty at 17% from 15%.
From 01.04.2025 the thresholds will change.
Starting threshold will fall from £250,000 to £125,000.
First time buyer nil rate threshold will fall from £425,000 to £300,000.
LATE PAYMENT INTEREST RATES ON UNPAID TAX LIABILITIES
From 06.04.2025 the current rate of 7.5% interest will be increased by 1.5% to 9%. So will go to base rate plus 4%.
BUSINESS RATES
The current 75% discount rate expires in April 2025. To be replaced by a 40% discount rate.
A plan to introduce a permanent lower business rate for high-street retail, hospitality and leisure properties from 2026/2027.
CORPORATION TAX
The main rate is to remain at 25%.
The smaller rate is to remain at 19% and associated companies rules to remain.
Annual Investment Allowance up to £1m to remain.
If you want to listen to this in more detail, check out my latest podcast on the budget at: https://www.spreaker.com/episode/115-what-does-the-autumn-2024-budget-mean-for-you–62595311
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Please send your questions through the contact us page on our website: www.champconsultants.co.uk
You can also follow Chantal on TikTok where some of these tax changes are discussed separately, https://www.tiktok.com/@toptaxtipsuk
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