2024 Budget: Key Changes

The UK Autumn Budget 2024 introduced significant tax and policy changes aimed at striking a balance between fiscal responsibility and fostering economic growth. However, UK businesses are expected to bear the majority of the impact.

Key measures include increases in National Insurance rates for employers, increases to minimum wages, adjustments to Capital Gains Tax rates and the inclusion of inherited pensions in Inheritance Tax calculations starting 2027.

Property taxation and business rates have also been reformed, with higher surcharges for additional dwellings.

National Insurance Contributions (NICs)

The changes to NI rules in particular are likely to represent a significant tax increase for many of the UK’s SMEs, impacting both cash flows and compensation structures. From April 2025:

• Employers’ NIC will increase by 1.2% to 15%
• The threshold for Employers’ NIC liability will fall from £9,100 to £5,000 which is likely to have the biggest impact on smaller businesses
• Although the Chancellor’s decision to increase the Employment Allowance from £5,000 to £10,500 (with the removal of the £100,000 cap on eligibility at the same time) should help soften the blow

Minimum Wage

With a view to improving living standards, the government announced significant increases to set for April 2025:

• The minimum wage will increases to £12.21 an hour for over-21s
• And minimum wages for 18-20 year olds will increases to £10 per hour

Capital Gains Tax (CGT)

• From 30 October 2024, non-residential assets will be taxed at the same rates as residential assets, with the lower rate CGT increasing from 10% to 18% and the higher rate from 20% to 24%
• £1m Business Asset Disposal Relief retained, with the rate increasing from the current 10% to 14% in April 2025 and 18% for 2026-27
• These changes (and below inheritance tax changes) are likely to require careful planning, especially for clients with significant investments

Inheritance Tax

• IHT thresholds frozen until 2030, with the nil-rate band remaining at £325,000 and the Residence Nil Rate Bank at £175,000
• From April 2027, inherited pensions will be included in estate valuation for IHT purposes for the first time, potentially leading to higher tax liabilities for beneficiaries

Other changes

While many businesses may not be overjoyed by the announcements made, confirmation of no changes to the Corporation Tax regime and the publication of a full corporate tax roadmap at least provides some much needed certainty for UK businesses.

The government also announced:

• A crackdown on umbrella companies and tax avoidance schemes
• That electric vehicle incentives will continue
• VAT on private school fees will be introduced from Jan 2025 as widely publicised
• Stamp duty surcharge for 2nd homes increases to 5% from the 31 October 2024
• Fuel duty frozen for another year but you save a 1p on a pint!

If you would like to understand how these announcements could impact your business and how to navigate the next steps as a consequence, do get in touch to discuss.