Posted: 01 / 11 / 2024

Article by: Sarah Richards (Group Head of Tax), David Evans (Head of Private Clients) and Laura Duggan (Head of Corporate Tax)
Image: Lauren Hurley / No 10 Downing Street, OGL 3 http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3, via Wikimedia Commons
Guide: How the Autumn Budget 2024 affects you

Chancellor Rachel Reeves’ first Budget arrived amid significant speculation, but it spared some of the harsher measures initially feared.

Leading the revenue-raising initiatives are the increases to employers’ National Insurance Contributions (NIC). Raising the employer NIC rate to 15% and lowering the earnings threshold at which it applies to £5,000 is expected to raise £25bn, making up over half of the £40bn in tax increases announced by the Chancellor.

At a minimum, employers will pay an additional £615 of NIC per employee, though the increase of the Employer’s Allowance to £10,500 will offer some relief to smaller businesses.

On the capital gains front, Capital Gains Tax (CGT) rates rose immediately for disposals on or after 30 October 2024, with the rates now at 18% for basic rate and 24% for higher rate taxpayers. Investors may find this a relief given recent rumours of even steeper rises and concerns that Business Asset Disposal Relief (BADR) might be scrapped. Reeves reaffirmed her support for entrepreneurs by retaining the £1 million BADR lifetime limit. However, the applicable CGT rate will increase to 14% from April 2025, and then to 18% in 2026, reducing the relief’s value to £60,000 (from £1 million in 2020).

Businesses owners face notable changes with Inheritance Tax as well, with caps on Business Property Relief and Agricultural Relief now limiting relief to £1 million and imposing a 50% discount thereafter. These caps will take effect in 2026, though anti-forestalling provisions apply immediately.

Private equity will see an increase in the carried interest tax rate to 32% by April 2025 and to 38% as it aligns with Income Tax in 2026. Non-domiciled individuals have a limited opportunity to benefit from a 12% temporary repatriation rate over the next two years. However, other reforms announced in Spring 2024 remain unchanged, intensifying the need to consider UK residency amid higher Inheritance Tax risks.

While Reeves aims to close the tax gap by raising an additional £6.5 billion annually through increased compliance activity, doubts remain over whether HMRC has the necessary technology and resources to achieve this.

Ultimately, the Autumn Budget may not have been as severe as anticipated, but only time will tell if these measures are enough to keep some of the more concerning pre-Budget proposals from re-emerging.

Learn more about how Autumn Budget 2024 affects you

Download our guide to the Autumn Budget 2024 here, where we break down the key announcements from the Budget statement and what they could mean for you. As always, the Budget plays a critical role in shaping the financial landscape for businesses and individuals alike, with policy changes affecting tax, pensions, and government spending.

In this guide, we provide an overview of the most important updates for our clients, helping you navigate the potential impact on your personal and business finances.

Whether you’re a company director, an entrepreneur, or an individual looking to manage your wealth, our team is here to help you understand the implications of these measures and how to plan for the year ahead.