The Labour Government have announced their autumn budget, with many changes being introduced across the coming years. With many set to be impacted, from businesses to agricultural landowners, what are the changes you need to know about?
Below are some of the significant takeaways from the autumn 2024 budget announcement.
Capital Gains Tax
Chancellor Rachel Reeves announced the government’s decision to increase Capital Gains Tax (CGT) rates as part of the 2024 budget. Capital Gains Tax is a tax on profit made from selling an asset, such as property or investments.
Currently, basic rate taxpayers pay 10% CGT, or 18% on residential property, where high earners pay 20% and 24% respectively. The changes to CGT will increase the lower rate from 10% to 18%, and the higher rate from 20% to 24%. Main residential properties will still be exempt from this tax due to Private Residence Relief.
Paul Westwell, Managing Partner at Bromleys, said:
“For businesses, while the feared increases in Capital Gains Tax have indeed come to fruition, they are not as severe as initially rumoured whilst still material. The new rates, though higher, will remain significantly below the headline income tax rates widely publicised, which is some relief. The main rates of Capital Gains Tax from 10% and 20%, that apply to assets other than residential property and carried interest, have increased to 18% and 24% respectively for disposals made on or after 30 October 2024. This is quite a substantial increase and could impact many business owners in the UK.
“The rate of Capital Gains Tax that applies to Business Asset Disposal Relief and Investors’ Relief is increasing to 14% for disposals made on or after 6 April 2025 and from 14% to 18% for disposals made on or after 6 April 2026. The good news is that these changes will give everyone ample time to plan accordingly and approach any transactions with a more strategic perspective. At the very least it makes for a welcome change from the recent frenzied deal-making activity driven by speculation and uncertainty.”
Entrepreneur Relief
Business Asset Disposal Relief (also known as Entrepreneurs’ Relief) can reduce Capital Gains Tax when selling all or part of your business.
This relief will remain at 10% this year, before rising to 14% in April 2024, and increasing again to 18% in 2026/27.
Stamp Duty Land Tax
The Stamp Duty Land Tax surcharge on second homes will be increased to 5%, raised from 2%. This will apply to current homeowners buying an additional residential property worth £40,000 or more.
Inheritance Tax
Inheritance tax is a levy applied to the estate of someone that has died. Currently, only about 4% of families end up paying, as most estates fall below the tax threshold.
Each individual has a £325,000 inheritance tax-free allowance. Estates valued below this threshold don’t incur tax, whilst those above it are taxed at 40% on the excess.
These thresholds are being extended until 2030, and it is unclear what changes will be made to inheritance tax after then. The Chancellor also announced that inherited pensions will be included in inheritance tax from April 2027.
Business Relief and Agricultural Property Relief on Inheritance Tax
The government is also reforming agricultural property relief and business relief from April 2026. Whilst the first £1million of combined agricultural and business assets will attract no inheritance tax, any assets over £1million will be required to pay inheritance tax at an effective rate of 20%.
Francesca Rigby, Senior Associate & Head of Wills, Probate & Planning for the Future Team at Bromleys, said:
“Rising estate values means more people will be drawn into paying Inheritance Tax (IHT) due to the extension of the freeze on Inheritance Tax (IHT) nil rate bands. Additionally, the loss of business and agricultural property relief on IHT, with the introduction of a 20% rate on assets over £1 million, will have a significant impact on landowners.
“For those looking to purchase second homes, the immediate increase in the additional property rate to 5% will cause a shock to the system. This, combined with the abolition of assured shorthold tenancies will no doubt have an impact on the private rental market.”
National Insurance Increase for Employers
From April 2025, the amount businesses will pay on their employees’ national insurance contributions will increase from 13.8% to 15% on a worker’s earnings above £175. The government has also lowered the threshold at which employers start paying tax on an employee’s salary, reduced from £9,100 a year to £5,000.
However, the amount employers can claim back from their National Insurance bill has been increased from £5,000 to £10,500.
Increase in Minimum Wage
Minimum wages for workers will be increasing from April 2025. National Living Wage (the minimum wage for over 21’s) will increase from £11.44 to £12.21. For 18–20-year-olds, minimum wage rise from £8.60 to £10, and apprentice wages will go up from £6.40 to £7.55.
Business Rates
Business rates are charged on most non-domestic properties, such as shops, pubs, offices and factories. In April 2025, the current 75% discount on rates is set to expire, being replaced by a discount of 40% up to £110,000.
For many businesses, this increase will see their rates nearly double.
If you fear you have been impacted by the most recent budget announcements, please do not hesitate to reach out to a member of our team for advice. Whether your concerns are around estate planning or future-proofing your business, we can help you.
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