Earlier today (30/10/2024) Chancellor Rachel Reeves held the Labour Party’s first Budget in 14 years, unveiling a number of tax rises and spending cuts to 'restore economic stability' and focus on 'economic growth'.
Here’s the headlines, and what they mean for you and your business…
*Disclaimer* All of the budget announcements listed within this article are not intended as tax advice. If you would like tax advice, please refer to a qualified tax advisor.
What was announced in the Autumn budget 2024?
Labour announced a plan to increase taxation to fund investment and to "rebuild public services". Announced changes are summarised below:
Business Tax
- Lower rate Capital Gains Tax (CGT) will increase from 10% to 18% and higher rate CGT will rise from 20% to 24%
- Maintaining the lifetime limit for business asset disposal relief at £1m
- 40% relief to be introduced on business rates for the retail, hospitality and leisure industry in 2025-26 up to a cap of £110,000 per business
Related: How to groom a business for sale
Personal Tax
- Inheritance Tax (IHT) threshold freeze extended from 2028 to 2030, so inheritors will be able to inherit the first £325,000 of an estate tax-free for an additional 2 years
- From April 2026, inheritance tax will be payable on combined business and agricultural assets over £1m, applying with 50% relief, at an effective rate of 20%
- Stamp Duty Land Tax (SDLT) - The surcharge for second homes will increase from 3% to 5%, from tomorrow (October 31st 2024)
- Income tax and NI thresholds to rise with inflation from 2028-29
Related: What is Stamp Duty and what are the current rates?
Employment
In employment, the chancellor aims to ‘protect working people from unfair dismissal’, 'safeguard them from bullying in the workplace’ and 'improve access to maternity and paternity leave’, presumably through the newly announced Employment Rights Bill.
She went on to state that Labour will not increase National Insurance, VAT or income tax for working people, however:
- Employers' National Insurance (NI) contributions to rise from 13.8% to 15% by April 2025
- The threshold at which businesses start paying NI on a workers' earnings will be lowered from £9,100 to £5,000.
- Employment Allowance will rise from £5,000 to £10,500. Meaning, according to the chancellor, 865,000 employers won’t pay any NI at all next year, and over 1,000,000 will pay the same or less than previously.
- Carers will be able to earn the equivalent of up to 16 hours at the National Living Wage per week and still receive Carers Allowance
Related: Employment Rights Bill - New Workers' Rights Explained
In our next Employment Law Update, our Employment Experts are breaking down the Employment Right Bill in detail and answering any questions you may have. Register here.
Is Minimum Wage going up?
The Chancellor also announced that Minimum wage will be going up. The rises are as follows:
The minimum wage for over 21s, known as the National Living Wage, will rise from £11.44 to £12.21 from April 2025.
The minimum wage for 18-20 year olds will rise from £8.60 per hour to £10, the second rise this year.
Lastly, the minimum wage for apprentices will increase from £6.40 to £7.55 an hour.
How does this affect me?
Those selling a business
“As a result of recent speculation in the run-up to this highly-anticipated budget, our corporate team have handled a number of business sales and purchases on very tight timelines." says Matthew Fretten.
"Now that we have some certainty around changes to Capital Gains Tax and Business Asset Disposal Relief, we anticipate the next five months to be a very busy period for the department.”
For further guidance on a business sale, you can speak to our bright Corporate & Commercial Team here.
Second home owners
Those who are considering, or are in the process of, buying a second home, whether for personal use or to let out, now pay a higher Stamp Duty Land Tax rate. The new rates come into force from tomorrow.
For further guidance on your Stamp Duty Land Tax obligations, get in touch here.
Related: Buy-to-let mortgages - Everything you need to know
Beneficiaries and testators
The inheritance tax threshold was frozen until 2030, so most beneficiaries will see no change to thresholds and rates before that date.
Related: How does Inheritance Tax work and can you avoid it?
Any questions?
If you have any questions following this budget, regarding how you or your business will be affected, please don’t hesitate to get in touch with our team.
You can call us on 01202 499255, or fill out the form at the top of this page, for a free initial chat.
*Disclaimer* To reiterate, all of the budget announcements listed within this article are not intended as tax advice. If you would like tax advice, please refer to a qualified tax advisor.
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