On 30 October 2024, Rachel Reeves, the new Chancellor of the Exchequer, delivered the first Budget under the Labour government. The Autumn Budget 2024 introduced measures aimed at restoring economic stability, closing a £22 billion gap in public finances, and stimulating growth. While workers were largely spared from tax hikes, businesses and property owners are now facing several changes.
Capital Gains Tax (CGT) Increases
Capital Gains Tax rates have risen significantly. Basic rate taxpayers now pay 18% (up from 10%), and higher rate taxpayers 24% (up from 20%) on most assets. Business Asset Disposal Relief remains, but the rate will increase to 14% in 2025/26 and 18% in 2026/27.
Impact: Anyone selling assets is now subject to higher tax bills. Business owners considering selling should urgently review timing strategies to benefit from the current relief rates.
Employer National Insurance (NI) Rise
Employer NI contributions increased from 13.8% to 15% in April 2025. Additionally, the threshold for NI payments dropped from £9,100 to £5,000. However, the Employment Allowance has risen to £10,500.
Impact: Payroll costs have risen, affecting hiring and remuneration strategies. Businesses should review profit extraction methods and update budgets accordingly.
Inheritance Tax (IHT) Updates
IHT thresholds remain frozen until 2030, but Business and Agricultural Property Reliefs will be capped. From 2026, 100% relief will apply only to the first £1 million, reducing to 50% beyond that. Unused pension funds will be included in estates for IHT from 2027.
Impact: Estate planning needs urgent attention, especially for business owners and high-net-worth individuals. Pension planning strategies will also need to be reviewed.
Business Rates Relief for Retail, Hospitality, and Leisure
Businesses in these sectors are now receiving a 40% relief on business rates (capped at £110,000) for 2025/26. The small business multiplier has been frozen.
Impact: Eligible businesses should ensure they are claiming relief to reduce costs and check that business rates are correctly applied.
National Minimum Wage Increase
The National Living Wage has risen to £12.21 per hour for those aged 21+, with significant increases for younger workers and apprentices.
Impact: Employment costs have increased. Businesses should review staffing budgets and assess the financial impact.
End of the Non-Dom Tax Regime
The non-dom regime was replaced by a residence-based system in April 2025. A new repatriation facility and temporary reliefs apply.
Impact: Affected individuals must review residency and tax arrangements to mitigate impacts.
Income Tax Threshold Freeze Ending
While no immediate changes to income tax rates or thresholds were announced, the freeze will end in 2027-28, with thresholds linked to inflation from 2028-29.
Impact: Tax liabilities will continue to rise due to ‘fiscal drag’ until thresholds are uprated. Reviewing income strategies is advisable.
Corporate Tax Roadmap
Corporation tax rates remain unchanged, with commitments to stability until 2028/29. Full-expensing and R&D tax credits continue.
Impact: Businesses can plan with greater certainty but must ensure compliance with R&D claim rules as HMRC scrutiny increases.
How We Can Help:
These changes could significantly affect your business and personal finances. Our team is here to provide tailored advice to help you navigate the new landscape. Contact us today to discuss how these changes impact you.