Autumn Budget 2024: Key Updates You Need to Know
ER NIC
Effective from April 2025, there will be an increase in the employer (ER) National Insurance Contributions (NICs) rate by 1.2% from 13.8% to 15%. Additionally, the threshold above which an employer has to pay ER NICs (termed the “Secondary Threshold”) is reduced from £9,100 to £5,000. Therefore, our clients will pay 15% ER NICs on an employee’s earnings who breach the annual secondary threshold of £5,000 annually or £416.67 monthly.
There is, however, an increase of the Employment Allowance (EA) from £5,000 to £10,500, which will mitigate some of the above increase. The EA allows eligible employers to reduce the total amount of NI it pays per year, by up to £10,500 from April 2025. An eligible employer is currently a business or charity with documented employees, paying Class 1 NICs of less than £100,000. From April 2025, this £100,000 limit is being removed from the definition of eligible employer, making it more accessible to employers.
Effective from 30 October 2024 (last week), the main rates of capital gains tax (CGT) on chargeable disposals, other than on properties and carried interest, have increased, as per below:
- The basic CGT rate has increased to 18% from 10%; and
- The higher CGT rate has increased to 24% from 20%.
This is to bring the CGT rates in line with those already charged on disposal of properties.
Also from 30 October 2024, Business Asset Disposal Relief (BADR) and Investors Relief (IR) will remain at 10% but increase to 14% from April 2025 and 18% from April 2026. BADR and IR are applied as special CGT rates for qualifying disposals, IR is designed for investors who are not actively involved in the business e.g. investors on the AIM market and business angels, whereas BADR is relief for active owners in the business. Additionally, following on from the reduction of the BADR lifetime limit, the IR lifetime limit has also been reduced from £10 million to £1 million too.
CGT on carried interest, normally paid by private equity managers on the gains made from investments, will be taxed at a flat rate of 32% from April 2025, increased from 18% (basic rate) and 28% (higher rate). There will be further reforms on this CGT tax from April 2026, bringing it under Income Tax rather than CGT.
Effective from April 2025, the non-domiciled tax regime is to be abolished and replaced with a new residence-based regime, essentially basing status on residence rather than domicile. The new regime will provide 100% relief on foreign income and gains for new arrivals to the UK in their first four years, provided they have not been a UK tax resident in any of the previous consecutive ten years. This impacts clients who are non-domiciled in the UK but are UK residents. After the initial four-year period, the individuals will be taxed on their worldwide income and gains (regardless of whether it is remitted to the UK or not) in accordance with the normal tax rules for UK residents.
Effective from the 31 October 2024, the Stamp Duty Land Tax (SDLT) surcharge for additional dwellings (i.e. paid on top of the normal SDLT) will increase from 3% to 5%. This will impact clients who are purchasing second homes, buy-to-let residential properties and companies purchasing residential properties.
Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) will go ahead from April 2026. This is where records will have to be collected digitally and provide quarterly digital updates. The tax return will also have to be supplied to HMRC through a MTD compatible software.
Inheritance tax
There are a few changes to inheritance tax, but the one most applicable to our clients relates to Business Property Relief (BPR) and Agricultural Property Relief (APR). Effective from April 2026, one will receive 100% relief for the first £1 million of combined agricultural and business assets, and 50% relief on assets over £1 million.
Additionally, for business assets, BPR is reducing from 100% relief to 50% on shares not listed on the markets of a recognised stock exchange, such as AIM.
VAT
Private schools will now apply VAT to education and boarding services fees at the standard rate (20%) from 1 January 2025.
Corporation Tax
The published Corporation Tax RoadMap, states that the current corporation tax rates will remain in place, capping the main rate at 25% and maintaining the small profits rate of 19% (and thresholds) until at least the tax year 2026/2027 (beginning 6 April 2026).
The 100% First Year Allowance (FYA) for zero emission cars and charging points has been extended to 31st March 2026.
The Annual Investment Allowance (AIA) is remaining at £1million, and the other core features of the UK capital allowance regime including writing down allowances and structures and buildings allowance are maintained.
Under the Roadmap, it confirmed that the current R&D rates will be maintained under the merged R&D scheme and enhanced R&D intensive support scheme.
Annual Tax on Enveloped Dwellings (ATED)
Effective from April 2025, ATED annual charges will rise by 1.7%.
Business rates
Effective from April 2025, the eligibility of private schools for charitable rate relief will be removed.
Effective from April 2025, there will be the following increases to the National Living Wage (NLW) and National Minimum Wage (NMW):
- NLW (21 and over): £12.21 (increase of £0.77)
- 18-20 Year old rate: £10.00 (increase of £1.40)
- 16-17 Year old rate: £7.55 (increase of £1.15)
- Apprentice rate: £7.55 (increase of £1.15)
- Accommodation Offset: £10.66 (increase of £0.67)
Benefits in Kind (BIKs)
Effective from April 2026, it will be mandatory for employers to report and pay tax on BIKs (except for accommodation and loans) using payroll software i.e. on a real time basis. A new end of year process will be introduced.
Late payment charges
Effective from April 2025, the interest rate HMRC charges on unpaid tax liabilities charged by HMRC will increase by 1.5% from the Bank of England base rate + 2.5% to the Bank of England base rate + 4%. The increase will not be matched by a corresponding increase in the rate payable by HMRC on repayments.
