Autumn Budget 2024 summary and highlights

The Budget included £40 billion in tax rises, with businesses picking up much of the bill. 

With employers’ National Insurance rates increased and payment thresholds reduced, this move alone is expected to yield £25 billion for the Treasury. Meanwhile planned increases to Capital Gains Tax are also noteworthy, even if they remain the lowest in the G7. 

Business owners may breathe a sigh of relief at the continued freezing of fuel duty, as well as increases to the Employment Allowance, more than doubling the allowance from 2025. However, not all business owners will benefit from this relief, and many will face a sharp hike in NIC charges.

Here are the main announcements from the Autumn Budget 2024 affecting you and your business. 

Employer National Insurance changes

One of the key changes in the Autumn Budget was an increase in the rate of National Insurance Contributions (NIC) paid by employers in respect of the wages they pay to their employees.  

Currently, employers pay employer NIC at the rate of 13.8% on wages over £9,100.  

It was announced that from April 2025, the rate employers must pay NIC would increase by 1.2% from 13.8% to 15%. 

In addition, the threshold where employer contributions become payable will fall from £9,100 to £5,000. The threshold will then remain at £5,000 until 5th April 2028. The plan is then to increase the threshold annually for inflation. 

To support businesses, the Government intends to make changes to the Employment Allowance. The Employment Allowance is available to certain eligible businesses to reduce their employer NIC each tax year. The allowance currently allows eligible businesses with employer NIC bills of £100,000 or less in the previous tax year to deduct £5,000 from their employer NIC bill.  

The Chancellor announced an increase in the Employment Allowance from £5,000 to £10,500, and plans to remove the £100,000 eligibility threshold, expanding this to all eligible employers with employer NICs bills from 6th April 2025. 

However, you can’t currently claim the employment allowance if you are a company with only one employee paid above the Class 1 NIC secondary threshold and that employee is also a director of the company.  The rise in the NIC rate could therefore negatively impact single director companies who will face a NIC hike from April 2025. 

Capital Gains Tax

Key change 

The Chancellor announced the Capital Gains Tax (CGT) rates on residential property will remain unchanged at 18% for basic rate taxpayers and 24% for higher rate taxpayers. However, for other assets such as shares, the CGT rates are due to increase. The CGT rate on carried interest is to increase to 32% from April 2025. 

In a blow to business owners, the Chancellor announced a widely used CGT relief on the sale of business assets will be reduced.  

Further detail 

For individuals, the rate of CGT due on disposal of taxable assets depends on whether you are a basic, higher or additional rate taxpayer, as well as the type of asset disposed of.  

Previously, a higher or additional rate taxpayer paid CGT at 24% on residential property, 28% on gains from carried interest and 20% on other chargeable assets.  

Again, under the previous rules, a basic rate taxpayer paid CGT at 18% on residential property and carried interest gains, and 10% on other chargeable assets. 

The Chancellor announced the lower and higher main rates of CGT will increase to 18% and 24% respectively for disposals made on or after 30th October 2024.  

We have summarised the main changes for individuals below: 

	Previous CGT rates		CGT rates on or after 30th October
	Basic rate	Higher or additional rates	Basic rate	Higher or additional rates
Residential property	18%	24%	18%	24%
Other assets – such as shares	10%	20%	18%	24%

The Government also plans to reform the way carried interest is taxed. As an interim step, the two CGT rates for carried interest will both increase to 32% from 6th April 2025. 

Business Asset Disposal Relief (BADR) is an important CGT relief available to individual business owners that are planning their retirement, or a sale or exit from their business. The relief is subject to a lifetime cap on the first £1 million of eligible gains. 

The CGT rate for BADR and Investors’ Relief will increase from 10% to 14% from 6th April 2025 and will increase again to match the lower main rate of CGT at 18% from 6th April 2026. 

The lifetime limit for Investors’ Relief will be reduced from £10 million to £1 million for all qualifying disposals made on or after 30th October 2024, matching the lifetime limit for BADR. 

Stamp Duty Land Tax (SDLT) – England only 

From 31st October 2024, the Higher Rates for Additional Dwellings surcharge on Stamp Duty Land Tax (SDLT) in England will be increased by 2% from 3% to 5%. 

This increase will be paid by second home buyers, landlords and businesses purchasing residential property in England.  

The single rate of SDLT that is charged on the purchase of dwellings in England costing more than £500,000 by corporate bodies will also be increased by 2 percentage points from 15% to 17%. 

Inheritance Tax

The Chancellor confirmed that the existing regime, which gives an Inheritance Tax (IHT) nil rate band of £325,000 and an additional residence nil rate band of £175,000, where a home is owned and specifically left to direct descendants, will not be changed in the Autumn Budget 2024. 

This gives a combined allowance of £1 million for certain married couples. 

The current Inheritance Tax thresholds were due to be frozen until April 2028, and the Government is extending these threshold freezes for a further two years to April 2030. 

Several valuable IHT reliefs were mentioned by the Chancellor, and changes were announced to restrict these reliefs from April 2026. 

Agricultural and Business Property Relief 

These reliefs allow certain agricultural and business assets to be passed on death, free of Inheritance Tax. 

The 100% rate of relief will continue, but only for the first £1 million of combined agricultural and business assets. Thereafter, only 50% relief will apply, reducing the effective rate of Inheritance Tax on affected assets from 40% to 20%. 

Unlisted Shares 

The Government will also reduce the rate of business property relief available from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of a recognised stock exchanges, such as the Alternative Investment Market (AIM Shares), without the benefit of the £1 million allowance mentioned above. 

Pensions 

According to our friends at Financial Planning by TaxAssist, one notable change which will impact financial planning and wealth transfer is that inherited pension pots will be brought into IHT calculations.  

The Government is removing the opportunity for individuals to use pensions as a vehicle for Inheritance Tax planning by bringing unspent pots into the scope of Inheritance Tax from April 2027. This will restore the principle that pensions should not be a vehicle for the accumulation of capital sums for the purposes of inheritance, as was the case prior to the 2015 pensions reforms. 

Inheritance tax is charged at 40% on property, possessions and money above a £500,000 threshold (combined nil rate band and residential nil rate band). From April 2027, an estate will also include any unused pension pots.  

Income tax & NIC thresholds

The thresholds for Income Tax and National Insurance Contributions (NICs) will continue to be frozen until March 2028. From 2028/29, the thresholds will be uprated in line with inflation. 

Business rates – England only

The Chancellor announced plans to lower business rates for high street premises in England to help “level the playing field” with online competitors and announced the following steps: 

Permanently lower business rates for the retail, hospitality and leisure sector in England. To create certainty for those businesses, the previously temporary relief will now be made permanent for properties with a rateable value under £500,000 from 2026/27. The intention is to fund this with a new higher multiplier will be introduced from 2026/27, for properties with a rateable value of over £500,000. 

Until the new multipliers are introduced, support for retail, hospitality and leisure properties of 40% relief will be provided for 2025/26 up to a cash cap of £110,000 per business. 

The Government has also announced that the small business multiplier, for those properties with a rateable value of less than £51,000, will be frozen at 49.9% for 2025/26. Meanwhile, the standard multiplier will be uprated by CPI to 55.5%, from 54.6% for 2024/25, an increase of 0.9%. 

Capital allowances on zero-emission cars 

In line with the Government’s commitment to achieving net zero greenhouse gas emissions by 2050, it is maintaining electric vehicle incentives. 

The 100% First Year Allowance for qualifying expenditure on zero-emission cars and plant and machinery for electric vehicle charge-points have been confirmed for a further year. 

Both first year allowances will expire on 31st March 2026 for corporation tax purposes and 5th April 2026 for income tax purposes. 

Research and Development 

The Chancellor announced that she plans to discuss widening the use of advance clearances in research & development reliefs with those affected, with the plan to issue a further consultation in Spring 2025. The Government has also published a document setting out further information on the scale and characteristics of error and fraud up to 2023-24, the policy and operational changes that have been made to address this, and further data on taxpayer’s experiences. 

Interest rate on late paid tax

To encourage taxpayers to pay tax on time, the rate of interest payable on unpaid tax will increase from 6th April 2025 by 1.5% from 7.5% to 9%.  

National Minimum Wage

The National Living Wage, which is payable to those aged 21 and over, is to be increased by 6.7% to £12.21 per hour from April 2025, for all eligible employees. 

To close the gap between the hourly wage for 18-year-olds and 21-year-olds, the rate for those aged 18-20 will be increased by 16.3% to £10.00. The Government is also increasing the minimum wages for Under 18s and Apprentices to £7.55 per hour 

The Chancellor made further mention of aligning the rates for all adults aged 18 and over to a single adult wage rate. 

VAT on private school fees 

From 1st January 2025, education services, vocational training and boarding services provided by private schools in the UK will be subject to the standard rate of VAT of 20%.  

Anti-forestalling provisions capture all fees paid from 29th July 2024 to 30th October 2024, for the school term commencing in January 2025 and after will be subject to VAT. 

Pupils with special educational needs that can only be met in a private school where local authorities and devolved Governments fund these places will be compensated for the VAT they are charged. 

The Government will remove business rates charitable rate relief from private schools in England from April 2025. 

Reform of ‘Non doms’ regime

The Chancellor announced that she plans to continue with the previous Government’s plans to reform the tax system for ‘Non doms’. Under the current rules, those not UK domiciled or deemed domiciled in the UK, but who are UK resident can choose to be taxed on the remittance basis.  

This means that while they pay tax on their UK income and gains in the same way as other UK residents, they only pay tax on their overseas income and gains when these are remitted to the UK. 

This preferential tax treatment, based on the taxpayer’s domicile status, will be removed for all new foreign income and gains that arise from 6th April 2025.  

The old regime will be replaced by a residence-based system, providing relief on overseas income and gains for people arriving in the UK, in their first four years of tax residence, provided they have not been UK tax resident in the 10 tax years immediately prior to their arrival. 

From 6th April 2025, all former remittance basis users who are not eligible to be taxed under the new system will pay tax at the same rate as other UK resident individuals. Former remittance basis users will continue to pay tax on foreign income and gains that arose before 6th April 2025 that they remit to the UK. 

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Date published 11 Sep 2024 | Last updated 1 Nov 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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