Autumn Budget 2024 – Key Changes & Their Impact

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Rachel Reeves, the Chancellor of the Exchequer, has unveiled the 2024 Autumn Budget, presenting a plan to address a £22 billion deficit in public finances while investing in public services and stimulating economic growth. Key changes include adjustments to Inheritance Tax (IHT), employer responsibilities, Capital Gains Tax, and property taxes. Here’s a breakdown of these updates and what they mean for you, your business, or your family.

Inheritance Tax changes

The current Inheritance Tax thresholds remain frozen until 2030. Individuals can pass on up to £325,000 worth of assets without incurring IHT, and married couples can combine their tax-free amounts, allowing up to £650,000 to be passed on tax-free. Additionally, an extra £175,000 per person applies if the main residence is inherited by children or grandchildren.

Starting April 2027, inherited pensions will be subject to IHT, impacting families relying on tax-free pension benefits. From 6 April 2025, significant changes will affect the relief available on qualifying business and agricultural assets. Currently, up to 100% relief is available in addition to existing nil-rate bands and exemptions. However, moving forward, this 100% relief will only apply to the first £1 million of combined agricultural and business property. Any amount above this threshold, 50% relief, meaning that an inheritance tax of 20% will be charged. Planning with an adviser may be beneficial to understand how these new rules might affect your financial legacy.

Changes impacting businesses and employers

Several measures will affect businesses and employers:

  • National Insurance: The employer’s National Insurance rate will rise by 1.2% to 15%, and the threshold for paying National Insurance on each employee’s salary will drop from £9,100 to £5,000, increasing employment costs for many businesses.
  • Employment allowance: This will rise from £5,000 to £10,500, exempting around 865,000 small businesses from paying National Insurance in 2025.
  • Business rates: Hospitality, retail, and leisure sectors will benefit from two lower permanent tax rates starting in 2026-27, though high-value properties will face higher contributions.

Capital Gains Tax

Capital Gains Tax (CGT) rates will increase immediately, with the lower rate rising from 10% to 18% and the higher rate from 20% to 24%. Business Asset Disposal Relief will remain at 10% for 2024 but will rise to 14% in April 2025 and 18% in April 2026. Entrepreneurs and business owners may need to reconsider their exit strategies or reinvestment plans.

Property taxes

Homeowners, landlords, and prospective buyers will face several updates:

  • Stamp duty: The surcharge for second homes will increase by 2 percentage points to 5%, likely to ease pressure on the housing market by disincentivising additional property acquisitions. However, it’s important to note this will not affect property transactions in which contracts have been exchanged before 31 October, the budget states that where exchanges happened prior to 31 October are not affected by the rate increase.
  • Capital Gains Tax on residential property: Rates will remain at 18% and 24%, offering stability for investment planning. However, the increased CGT on carried interest (reaching 32% in April 2025) suggests growing tax liabilities on potential gains.

Pensions, investments, wealth management, and savings adjustments

Key changes include:

  • Inherited pensions in IHT: From April 2027, inherited pensions will no longer be exempt from IHT, necessitating a review of estate plans.
  • Income Tax thresholds: These will rise in line with inflation post-2027/28, aiming to reduce the risk of ‘fiscal drag’.
  • State pension increase: The state pension will increase by 4.1% next April, bringing the full new state pension to £230.30 per week.

Additional points: schools, corporation tax, and international residents

  • Private school fees: VAT will be introduced on private school fees from January 2025, and these institutions will lose business rates relief from April.
  • Non-dom tax regime: The current regime will be abolished, and replaced by a new residence-based tax system expected to raise £12.7 billion over five years.

Looking forward

The 2024 Autumn Budget aims to balance fiscal responsibility with support for small businesses, employees, and individuals managing estates and investments. At Nelsons, we are here to help you navigate these changes. Whether you’re a business owner assessing new National Insurance impacts or an individual reviewing estate plans, our team is ready to guide you through these shifts with confidence and clarity.

How can we help?

If you need further advice on the above subjects please contact us on 0800 024 1976 or via our online form where our expert teams will be able to assist you.

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