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Autumn Budget 2024: What were the Chancellor’s key announcements?

Rachel Reeves has delivered her first Budget as Chancellor of the Exchequer and the first Labour Budget in 14 years. The Government has had to balance a challenging fiscal situation with a plan to invest in the future and growth. Our latest article highlights the key announcements made in the Autumn Budget 2024.

Autumn Budget 2024

Rachel Reeves delivered the Autumn Budget 2024 to Parliament on Wednesday 30th October 2024. As part of the Budget, the Chancellor has increased borrowing to £127bn for this tax year and increased taxes by a record £40bn.  Alongside the headline changes to minimum wage, income tax, national insurance, fuel duty, and increased spending for public services, several changes may affect you.

Please visit the Government’s website to read the full Autumn Budget 2024.

What were the Chancellor’s key announcements in the Autumn Budget 2024?

Income Tax and National Insurance

As part of the Autumn Budget, the Chancellor reaffirmed Labour’s manifesto promise that working people would not pay higher income tax or national insurance. The Chancellor announced that the rates of income tax and national insurance paid by employees would remain the same, and the current freeze on thresholds would end in April 2028.

The Chancellor announced that employers’ national insurance would increase from 13.8% to 15% from April 2025. This, alongside a drop in the threshold at which employers start to pay national insurance from £9,100 to £5,000, is expected to raise £25bn.

Inheritance Tax

The inheritance tax threshold freeze of £325,000 (or £500,000 if it includes a residence left to a direct descendant) has been extended to 2030. This means that more estates will be subject to the inheritance tax regime. Inherited pension death benefits will also be subject to inheritance tax from April 2027. This will not impact those who receive ongoing annuity payments following the death of the original annuitant or those receiving an income from a defined benefit pension scheme. However, it will likely impact all other pension death benefits, including death in service payments from pension schemes. The measures aim to raise over £2 billion a year.

Agricultural Property Relief and Business Property Relief will also see a reform. From April 2026, the first £1 million of combined business and agricultural assets won’t be subject to inheritance tax. For assets over £1m, there will be 50% relief at an effective rate of 20%.

Employment Allowance

The Employment Allowance will increase from £5,000 to £10,500. The Chancellor announced that this means that 865,000 employers won’t pay national insurance next year.

Business Rates

The existing 40% on business rates for the retail, hospitality, and leisure industries will continue in 2025/6, up to a cap of £110,000 per business. From 2026/27, the Treasury intends to introduce two new lower business rates for these industries.

Business Asset Disposal Relief

The lifetime limit for Business Asset Disposal Relief will remain at £1 million.

Pensions

As mentioned, from April 2027, any value left in your personal pension pot on your death will be included in your IHT estate and taxed in the usual way.

Also announced in the Budget, was that pension credit will rise by 4.1% from around £11,400 per year to around £11,850 for a single pensioner. The Chancellor also announced a state pension triple lock, and spending on the state pension is projected to rise 4.1% in 2025-26.

Capital Gains Tax

One of the most widely anticipated changes that was expected to be announced in the Budget was the changes to capital gains tax. The Chancellor announced that the lower rate of capital gains tax will rise from 10% to 18%, and the higher rate will rise from 20% to  24%. There will, however, be no increase in the 18% and 24% capital gains rates imposed on the sale of second homes.

Although the lifetime amount of gains eligible for business asset disposal relief remains at £1m, the rate of capital gains tax payable on such gains will increase from 10% to 14% from the 6th of April 2025 and to 18% from the 6th of April 2026.

Non-dom Tax Regime

One of the Chancellors’ key announcements in the Autumn Budget 2024 was the abolition of the non-dom tax regime. From the 6th of April 2025, anyone who has been a UK tax resident for more than four years will be subject to UK tax on worldwide income and capital gains. New arrivals to the UK will not be taxed on foreign gains or income for the first four years of residence, provided they have been non-UK residents for the last 10 years or more.

Stamp Duty Land Tax

From the 31st of October 2024, stamp duty land tax on second homes will increase from 3% to 5%.

National Minimum Wage

Before the Budget, Labour confirmed that the national minimum wage would increase to £12.21, which is a 6.7% increase for adults over 21 from April 2025. The national minimum wage will also increase for 18-20-year-olds from £8.60 to £10. Apprentice wages will also rise to £7.55 per hour.

Tax avoidance

The Chancellor announced an investment to modernise HMRC’s systems to tackle tax avoidance, using the very best technology. The Government will also recruit additional HMRC compliance and debt staff.

A consultation will be published in early 2025 on measures to tackle promoters of marketed tax avoidance. This will include:

  • New options to tackle legal professionals behind tax avoidance schemes
  • New powers focussed on those who control or own promoter organisations

The consultation will also publish options to enhance HMRC’s powers and sanctions, allowing it to take swifter and stronger action against tax advisers who facilitate non-compliance.

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