Personal Taxes
Income Tax
- No increase in income tax rates.
- No increase in personal allowances. However, there will not be an extension to the freeze on income tax and National Insurance contributions thresholds. From April 2028, these personal tax thresholds will be uprated in line with inflation.
- High Income Child Benefit Charge - The reform announced by the previous government to base the High-Income Child Benefit Charge (HICBC) on household incomes, not individuals, will not proceed.
Capital Gains Tax
- The main rates of Capital Gains Tax (“CGT”) will increase:
- Basic Rate from 10% to 18%
- Above basic rate from 20% to 24%
For disposals made on or after 30 October 2024 (i.e. day of Budget), aligning them with the current residential property CGT rate.
- The CGT rate that applies to trustees and personal representatives will also increase from 20% to 24% for disposals made on or after 30 October 2024.
- The rate of CGT that applies to Business Asset Disposal Relief (qualifying business assets) will increase:
- From 10% to 14% for disposals made on or after 6 April 2025; and
- Increase again from 14% to 18% for disposals made on or after 6 April 2026.
Anti-forestalling and anti-avoidance will apply for some transactions during this period, particularly in relation to connected party transactions, and exchanged but uncompleted contracts.
- The Investors’ Relief (IR) lifetime limit is to be reduced from £10million to £1million for qualifying disposals made on or after 30 October 2024. Anti-forestalling will apply for share reorganisation transactions that took place before 30 October 2024.
The CGT rate that applies to IR is also increasing from 10% to 14% for disposals made on or after 6 April 2025 and is increasing from 14% to 18% for disposals made on or after 6 April 2026.
- Employee Benefit Trusts (“EOTs”) - There are several changes to the conditions for EOT which are mainly to close some abuse of the existing EOT rules, following a consultation earlier this year. A disposal to an EOT is tax free for the seller but has been abused.
- From 6 April 2025, the rates of Capital Gains Tax for carried interest will increase from 18% and 28% to 32%. This will be reviewed further under a consultation.
Inheritance Tax
- The Inheritance Tax (“IHT”) Nil Rate Band (“NRB”) freeze at £325,000 will be extended for 2028/29 and 2029/30. The same will apply to the Residential Nil Rate Band (“RNRB”) and RNRB taper. (The £325,000 has been in place since 2009!)
- Agricultural Property Relief (“APR”) and Business Property Relief (“BPR”) will be reformed from 6 April 2026.
The existing 100% rates of relief will continue for the first £1 million of combined APR and BPR.
- The rate of relief will be 50% thereafter (an effective 20% rate)
- Shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM, will no longer be exempt from IHT from 6th April 2026, but charged at 20%.
The government will publish a technical consultation by early 2025 regarding the proposed changes.
- From 6 April 2027 most unused pension funds and death benefits will be included within the value of a person’s estate for Inheritance Tax purposes. No more detail is provided, other than a consultation will take place on how this will be implemented.
This was the only announcement affecting pensions, whereas prior to the Budget, there was lots of noise re the 25% tax free lump sum and tax relief on pension contributions being abolished, but nothing else announced in the pension area.
VAT
- As already heavily covered in the press, private school fees will be subject to VAT from 1 January 2025. The government will also introduce legislation to remove private schools’ business rates relief from April 2025.
Miscellaneous
Non-UK Domiciles:
- The Non-Domicile tax regime will be abolished from 6 April 2025, to be replaced with a residence based regime, providing 100% relief on eligible foreign income and gains for the first four years of tax residence, subject to certain conditions.
- Overseas Workday Relief will be retained, and not abolished.
- A new Temporary Repatriation Facility will be available for individuals who have previously been taxed on the remittance basis will be put in place.
- For IHT, similar residence-based rules will apply, including all individuals who have been resident in the UK for at least 10 of the last 20 years being brought within the UK IHT net on worldwide assets.
- Furnished Holiday Lets:
As already reported previously, the Furnished Holiday Let specific tax treatments will be abolished from April 2025 (see Harbour Key’s Article at
https://www.harbourkey.com/blogs/articles/abolishment-of-the-furnished-holiday-let-regime
Business Taxes
Employment Taxes
- The rate of employer National Insurance contributions (NICs) will be raised from 13.8% to 15%.
- The per-employee threshold at which employers become liable to pay National Insurance (the Secondary Threshold) will be reduced from £9,100 to £5,000 from 6 April 2025.
- The Employment Allowance will increase to £10,500 from 6 April 2025. The government will also expand the Employment Allowance by removing the £100,000 eligibility threshold.
- Minimum wage: From April 2025, the minimum wage for employees aged 21 and over will increase by 6.7% to £12.21 an hour, equivalent to £1,400 a year for a full-time worker. Minimum wage for workers aged 18 to 20 will rise by 16.3% to £10 an hour.
- From April 2026, most benefits in kind and Class 1A National Insurance will be required to be reported through payroll (Real Time Information).
- From 2028, the benefit in kind percentages for all cars will increase, including a 2% per year increase for electric vehicles and higher increases for some hybrid vehicles. Hybrid vehicles will be increased to align more closely with combustion engines cars, to continue the drive to electric.
- From April 2025 double cab pick-up vehicles with a payload of one tonne or more will be treated as cars for the purposes of benefit in kind charges and capital allowances. For those who have purchased before April 2025, capital allowances can be continued to be claimed, but transitional arrangements will be in place re benefit in kind charges.
- The van benefit in kind charge fuel benefit will increase by inflation April 2025.
Corporation Tax
A corporation tax road map was set out, which is to confirm the position for companies over the course of this parliament and provide comfort there will be no changes, which includes:
- The main rate of Corporation Tax will be frozen at 25% for the whole of this parliament.
- Retaining the small profits rate and marginal relief at current rates and thresholds i.e. the level at which 19% corporation tax is paid, and 25% is paid.
- Full expensing relief and the £1m annual investment allowance will remain with no changes.
- Research and development tax relief will remain, but enhanced checks on claims, and looking at enhancing the advance assurance system to minimise bogus claims.
Outside of the road map:
- The first-year allowances for zero-emission cars and electric vehicle charge points will be extended to the end of the 2026 tax year.
- See above the changes to double cab pick up vehicles and capital allowances.
Duties/Rates
- Business rates, for 2025-26, the small business multiplier will be frozen.
- For retail, hospitality and leisure, the current 75% discount will be replaced by a discount of 40% (up to £110,000 per business). From 2026-27, permanently lower tax rates will be introduced for this sector, but no further detail.
- Vehicle excise duties will increase in April 2025 in line with inflation. The rates for first year registrations (new cars), will be updated so that zero emissions cars pay the lowest first year rate at £10 from April 2029, scaling up based on emissions.
- Fuel duty will be frozen at current levels for one year. The 5p cut will be extended for a further 12 months and the planned increase in line with inflation for 2025-26 will be cancelled.
- The tobacco duty escalator is reintroduced, which increases in duty in line with inflation plus 2% at each annual Budget. The duty rate for hand-rolling tobacco will rise by an additional 10%, to 12% above RPI inflation. These changes will apply from 6pm on 30 October 2024. There is a flat rate of £2.20 per 10ml of vaping liquid.
- Air Passenger Duty (“APD”) rates will increase from April 2025 and again from April 2026, including a significant increase for passengers of private planes.
- Alcohol duty on draught products will be reduced from February 2025, with a cut of 1p per average strength pint. Alcohol duty on non-draught products will increase in line with the retail price index inflation from the same date.
Other taxes
- From 31 October 2024, the Stamp Duty Land Tax surcharge for purchasing additional residential properties and purchases by companies will increase from 3% to 5%. (This is will not impact those who have exchanged contracts before the 31 October).
- The Annual Tax on Enveloped Dwellings (“ATED”) SDLT rate will also increase from 15% to 17%.
- From April 2025, it will be possible for an ‘in-year’ increase in the Official Rate of Interest to take effect, which are relevant for beneficial loans and benefits in kind.
- The late payment interest rate charged on unpaid tax liabilities will increase by 1.5% more above the base rate from April 2025.
HMRC (Closing the tax gap)
- £1.4bn to be invested over five years to recruit 5,000 compliance staff.
- £262m over the next five years to recruit 1,800 HMRC debt management staff.
- Modernising HMRC debt management IT systems, investing in the use of credit rating agency data.
There is a big push, and we have already seen the changes in recent months to collecting unpaid tax more aggressively.
- Digitalisation of inheritance tax reporting.
- The usual push on tacking tax evasion and avoidance, including umbrella companies, regulating tax advisors.
Non Tax
- Late payment - To help small businesses deal with late payment of invoices, from 1 October 2025, companies bidding for government contracts over £5m per annum will be excluded from the procurement process if they do not pay their own suppliers within an average of 45 days.
- Small business funding schemes including Start Up Loans - More than £1bn in 2024-25 and 2025-26 will be provided to the British Business Bank to "enhance access to finance for small businesses", via the Start Up Loans and the Growth Guarantee Scheme.
- Made Smarter Adoption Programme – This business support programme, which is only available in certain areas, will have its funding doubled will be extended all nine English regions. (The scheme supports small manufacturing businesses to adopt advanced digital technologies).
