Autumn 2024 Budget Summary

On Wednesday 30 October 2024, Chancellor of the Exchequer Rachel Reeves delivered her first Budget, setting out a strategy to “invest, invest, invest” while announcing significant tax-raising measures totalling £40 billion.

The Budget introduced major changes to employer taxation, capital taxes, and wealth transfer planning. Our advisory team has compiled this summary of the principal measures affecting employers, business owners, and families.

Employer National Insurance Contributions

The most substantial revenue-raising measure fell on employers through changes to Class 1 National Insurance:

• Rate Increase: The employer NIC rate increases by 1.2 percentage points from 13.8% to 15.0% from 6 April 2025.
• Secondary Threshold: The point at which employers start paying NICs on each employee’s salary is reduced from £9,100 to £5,000 per annum until 2028.
• Employment Allowance: To protect smaller businesses, the Employment Allowance increases from £5,000 to £10,500, and the previous £100,000 eligibility cap was removed.

Capital Gains Tax (CGT) Increases

Effective immediately for disposals made on or after 30 October 2024:

• The standard rate of CGT rose from 10% to 18%.
• The higher rate of CGT rose from 20% to 24% (aligning non-residential rates with residential property rates).
• Rates for Business Asset Disposal Relief (BADR) and Investors’ Relief remain at 10% until 5 April 2025, rising to 14% from 6 April 2025 and 18% from 6 April 2026.

Inheritance Tax & Wealth Transfer Reforms

The Chancellor announced two structural changes to Inheritance Tax (IHT):

• Pensions within IHT: Unspent pension pots and death benefits will be brought into the scope of Inheritance Tax from 6 April 2027.
• APR & BPR Limits: 100% relief for Agricultural Property Relief and Business Property Relief will be capped at a combined £1 million from April 2026, with 50% relief applying to qualifying assets above that threshold.

Further Key Measures

• VAT on Private School Fees: Education and boarding services provided by private schools will be subject to 20% VAT starting from 1 January 2025.
• Non-Dom Regime: The abolishment of the non-UK domicile regime and introduction of the new residence-based regime were confirmed for 6 April 2025.