| On 30 October 2024, Chancellor of the Exchequer Rachel Reeves unveiled the Government’s fiscal plans to raise up to £40bn for public finances over the next five years. The measures aim to “restore economic stability” and put “more pounds in people’s pockets”, according to the Chancellor, who added that she believed the only way to drive economic growth is to “invest, invest, invest”. The following list is not exhaustive of all the announcements made. |
| 1.2% increase to Employers National Insurance contributions: From April 2025, there will be an increase to the amount of National Insurance (NI) contributions an employer must make. NI Contributions will increase by 1.2% to a total of 15%, and the National Insurance primary threshold – which is when employers begin to pay NI, will be lowered from £9,100 to £5,000. Although the NI threshold has been lowered, the amount of National Insurance a business can offset will increase as the employment allowance will change from £5,000 to £10,500. The government claims this change to the employment allowance will result in 865,000 employers paying no National Insurance, whilst over 1 million businesses will pay the same amount of National Insurance as the previous year. The Chancellor confirmed that the freeze on income tax and National Insurance thresholds will end in April 2028. From 2028 – 29, personal tax thresholds will be updated in line with inflation. Changes to the minimum wage: The National Living Wage paid to over-21s will go up by 6.7% in April 2025 to £12.21, while the National Minimum Wage for 18 to 20-year-olds will see a 16.3% increase to £10. Apprentices will get the biggest pay bump, with hourly pay increasing from £6.40 to £7.55. State pension: The state pension will rise by 4.1% to match the average earnings element of the triple lock. This means that next year’s full new state pension is set to reach £11,975.60 annually, an increase of £473. Corporation tax: The corporation tax rates will remain the same as before which are: 19% for taxable profits below £50,000 (small profit rate) 25% for taxable profits above £250,000 (main rate) Profits between £50,000 and £250,000 will be subject to a rate of 25% less marginal relief. Marginal Relief provides a gradual increase in Corporation Tax rate between the small profits rate and the main rate — this allows you to reduce your rate from the 25% main rate. Electric Vehicles: The Government is strengthening incentives to purchase electric vehicles (EVs) by widening the differentials in Vehicle Excise Duty First Year Rates between EVs and hybrids or internal combustion engine cars. The government is also maintaining EV incentives in the Company Car Tax regime and extending 100% First Year Allowances for zero emission cars and EV charge points for a further year. Update on business rates: The current 75% discount on business rates is set to expire in April 2025, this will be replaced by a discount of 40% (maximum discount of £110k). In addition, there is a plan to introduce permanently lower business rates for high-street retail, hospitality and leisure properties from 2026-27. Capital Gains Tax: The lower rate of Capital Gains Tax will rise from 10% to 18%, and the higher rate from 20% to 24%. The rates on residential property will remain at 18% and 24%. Rates on carried interest will increase to 32% from April 2025. Inheritance Tax: Inheritance Tax threshold freeze extended to 2030. The government will reform agricultural property relief and business property relief from April 2026. In addition to existing nil-rate bands and exemptions, the 100% rate of relief will continue for the first £1 million of combined agricultural and business assets to help protect family farms and businesses, and will be 50% thereafter. The government will also reduce the rate of business property relief to 50% in all circumstances for shares designated as “not listed” on the markets of a recognised stock exchange. From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all, but for assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%. 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. The government will invest £52 million to digitalise the inheritance tax service from 2027-28 to provide a modern, easy-to-use system, making returns and paying tax simpler and quicker. VAT on private schools: VAT will be added to private school fees from 1 January 2025. Eligibility of private schools for charitable rate relief will be removed from April 2025. Housing – Stamp duty second homes: Increase to Stamp Duty land surcharge for second homes by 2% to 5% immediately. Windfall tax on energy: The energy profits levy applied to oil and gas firms will rise by 3%, meaning the level of tax is now 38%, and this will remain in place until 31 March 2030. HMRC changes: The interest rate applied will increase on tax that is overdue to encourage prompt payment, in addition there will be an increase in HMRC criminal investigation work by hiring more compliance officers. Making Tax Digital update: There was a Making Tax Digital (MTD) update within the budget, and the Labour government reiterated its commitment to delivering on the current timeline and expanding the rollout for businesses with an income over £20,000 per year. You can read the full UK Autumn budget on the GOV website. As always, our team is here and ready for any questions or concerns you may have, to our existing clients or potential new ones, we urge you to voice your concerns, so we can better plan and advise you on how to keep your best foot forward. Call us on 01775 529345 or email office@cbsltd.org to get in touch. |
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