John M Taylor & Co, Chartered Accountants and Business Advisors, have provided CeeD with an analysis of the key announcements from the Autumn 2024 Budget, which our members and wider CeeD community may find helpful. This includes useful commentaries to help you understand how any relevant changes may affect you personally so that you can start planning for the future.
Rachel Reeves delivered her first Budget as Chancellor of the Exchequer on 30 October 2024. Aiming to deal with the £22 billion ‘black hole’ in public finances whilst restoring stability and rebuilding public services, the budget set out a number of tax measures expected to raise an additional £40 billion in tax revenue.
In the lead up to the budget, the Chancellor promised that there would be no increase to the tax burden on working people but the result was attention being diverted to employers: the headline being an increase in employers' national insurance burden. This increase adds a little over £900 per annum to the annual cost of an employee earning £30,000 per annum. In better news, the employment allowance will be increased to £10,500 minimising the impact of these changes for small employers. Company owners will be relieved to see no change to corporation tax rates or the rate of allowances available for capital expenditure.
It was also largely trailed in the media that there would be a focus on capital taxes as a means of raising additional revenue. Capital gains tax rates were increased, but not as much as feared, as was the headline rate payable where Business Asset Disposal Relief applies on the sale of a business. Perhaps the biggest concern from yesterday's budget was Inheritance Tax (IHT) and the cap on Agricultural Property Relief and Business Property Relief from 2026, alongside unused pension funds being brought within the IHT net from 2027. Owner managed businesses should consider the impact of these changes in the coming months to allow time to review what action can be taken, if any, to mitigate the potential IHT exposure.
You can download an analysis of the key announcements here.
Highlights
Individuals
- Capital Gains Tax - CGT rates increased to 18% (basic rate) and 24% (higher rate), no change to CGT rates on residential property gains.
- Business Asset Disposal Relief - £1m lifetime limit retained but CGT rate increasing to 14% in 2025 and then 18% by 2026.
- Inheritance Tax - Business Property Relief and Agricultural Property Relief capped at £1m of combined value, 50% relief thereafter.
- Inheritance Tax - AIM listed shares will now only receive relief at 50%.
- Inheritance Tax - Unused pension funds will now be within a taxpayers estate on death and subject to IHT in full
- Furnished Holiday Lets - FHL Regime to be abolished from April 2025 as announced in the Spring
- Non-Domiciled Taxpayers - Non-Domiciled tax status to be abolished from April 2025
- High Income Child Benefit - Plans to make this charge based on household income scrapped
- Double Cab Pickups - Such vehicles will be treated as a car from April 2025 with transitional rules for existing company owned vehicles.
*On 4th December 2024 the Scottish Government will announce their budget for 2025/26, with the Welsh Government budget following on 10th December 2024. This may result in further income tax changes for Scottish or Welsh tax residents.
Businesses
- Employer's National Insurance - Increasing to 15% from April 2025 with the threshold at which it begins to be paid reducing to £5,000.
- Employment Allowance - Increasing to £10,500 from April 2025 and the £100,000 eligibility threshold will be scrapped.
- Corporation Tax - No change, main corporation tax rate remains at 25% and small company rate at 19% (profits up to £50k)
- VAT - VAT Registration threshold remains at £90,000
- National Living Wage increasing to £12.21 from 1 April 2025 for those aged 21 or over.
- National Minimum Wage - increases to £10.00ph for those aged 18-20 and £7.55 for under 18s and apprentices.
- Electric Vehicles - 100% first year allowances extended to April 2026.
- Full expensing - (100% tax relief) for companies for (unlimited) expenditure on plant and machinery
- Annual Investment allowance - remains at £1m per annum on a permanent basis giving businesses 100% tax relief on capital expenditure
If there is anything contained within JMT's Budget Briefing that you would like to discuss further, you can contact them here.