The Chancellor of the Exchequer Rachel Reeves presented her Autumn Budget to Parliament on Wednesday 30 October 2024, some key tax changes are below:
Minimum wages: Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April. Rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a "single adult rate". Income tax band thresholds to rise in line with inflation after 2028, preventing more people being dragged into higher bands as wages rise.
Employer’s NICs: The employer NICs rate will be increased from 13.8% to 15% from April 2025, when the threshold above which employer NICs is paid will additionally be reduced from £9,100 a year to £5,000 a year. For some employers, increases will be at least partly mitigated by increases to the employment allowance. The employment allowance allows employers to reduce the total amount of National Insurance they pay per year. Employment allowance increased, which allows smaller companies to reduce their NI liability - to increase from £5,000 to £10,500
Capital Gain Tax: From 30 October 2024: The lower rate of CGT increased from 10% to 18% and the higher rate of CGT increased from 20% to 24%. The rate of CGT that applies to trustees and personal representatives increased from 20% to 24%. Also, from April 2025 the rate of Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will rise from 10% to 14%, and then to 18% from 6 April 2026.
SDLT: Point at which house buyers start paying stamp duty on a main home to drop from £250,000 to £125,000 in April. And threshold at which first-time buyers pay the tax will also drop back, from £425,000 to £300,000. Stamp duty surcharge, paid on second home purchases in England and Northern Ireland, increase from 3% to 5%
Inheritance Tax: Inheritance tax threshold (the NRB at £325,000; and the RNRB at £175,000) freeze extended by further two years to 2030, with unspent pension pots also subject to the tax from 2027. The Chancellor announced that, the government will reform Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026. The 100% rate of relief will continue for the first £1m of combined agricultural and business property, falling to 50% thereafter. above that there would be a 50% relief, at an effective rate of 20%, from April 2026.
VAT on private school fees:
The Chancellor has confirmed that introduced VAT on private school fees. The change would take effect in relation to fees in respect of education (and boarding) provided on or after 1 January 2025.
Non-UK domiciled individuals:
The Spring Budget 2024 announced that the remittance basis of taxation for non-doms would be abolished from 6 April 2025 and replaced with a residence-based regime. The new regime will provide 100% relief on foreign income and gains (FIG) for new arrivals to the UK in their first four years of tax residence, provided they have not been UK tax resident in any of the 10 consecutive years prior to their arrival. Also, scrapping the planned 50% reduction in foreign income subject to tax in the first year of the new regime; extending the temporary repatriation facility from two years to three years, with remittances taxed at 12% in 2025/26 and 2026/27, and at 15% in 2027/28. Extending overseas workday relief from three years to four years, aligning with the new four-year foreign income and gains regime, but introducing a financial limit of £300,000 or 30% of overall employment income; rebasing for capital gains tax applying to assets held on 5 April 2017 to the value at the date of disposal instead of rebasing to 5 April 2019 values; removing income tax relief on chargeable overseas earnings for income earned on or after 6 April 2025 (where overseas workday relief does not apply), but confirming that this income will be eligible for the temporary repatriation facility and taxable on the remittance basis;
A remittance basis user’s unremitted foreign income and gains arising prior to 6 April 2025 will continue to be taxable in the tax year when they are remitted to the UK.
It was also confirmed that a residence-based regime will apply to inheritance tax (IHT). An individual is a long-term resident (and in scope for IHT on their non-UK assets) when they have been resident in the UK for at least 10 out of the last 20 tax years. They will remain in scope for between three and 10 years after leaving the UK.
NAZALI TAX & LEGAL