31st October 2024
The Labour Government has announced its autumn budget, with many changes being introduced across the coming years. With many set to be impacted, from bereaved families to 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.
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.
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.
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.
Head of Residential Conveyancing at Myers & Co, Rachel Silvester, says:
“A stamp duty increase of 2% on second homes will likely impact the rental market, making buy-to-let even less attractive. For other property buyers, there was no mention of freezing the stamp duty thresholds, meaning they will increase from the end of March 2025 as planned. There will likely be a rush to complete purchases in March, and so buyers will need to start planning for that now.”
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.
The government is also reforming agricultural property relief and business relief from April 2026. Whilst the first £1 million 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%.
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.
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.
Jen Goodwin, Head of Corporate & Associate Director at Myers & Co Solicitors, said:
“Businesses will have a lot to say about the increase to National Insurance and National Minimum Wage. The National Insurance threshold is to be lowered for when businesses must start paying National Insurance on workers earnings from £9,100 to £5,000, and the rate will increase to 15% from April 2025. The National Minimum Wage is to rise by 7.6%.”
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.
Jen Goodwin continues:
“Although the business rates cliff edge has been smoothed by the budget, the 75% discount to business rates which expires in April 2025 will be replaced by a 40% discount. That still means many businesses will see their business rates nearly double. The Chancellor is asking businesses to help in propping up public services but to a significant extent and many businesses will be hit hard by this budget.”
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.
Call us on 01782 577000 or make a quick enquiry to get in touch.
