The UK autumn budget announcements were delivered today, 30 October 2024.
Corporation tax
The main rate of corporation tax will stay at 25% until the next election.
National insurance
National Insurance contributions for employers is to increase by 1.2 percentage points to 15% from April 2025. Also, the threshold at which employers start paying national insurance will fall from GBP 9,100 a year to GBP 5,000 a year.
However, the employment allowance is to increase from GBP 5,000 to GBP 10,500. This allowance can be claimed by businesses or charities with national insurance liabilities below GBP 100,000 per year and is a reduction in the amount of national insurance payable.
Personal income tax
There is no change to personal income tax rates. The freeze on the personal income tax thresholds will end in 2028, and the bands will then increase at the rate of inflation.
Non-domiciled tax regime
From 6 April 2025, the current rules for the taxation of non-UK domiciled individuals will be abolished. The concept of domicile as a relevant concept in the UK tax system will be replaced by a system based on tax residence. From 6 April 2025, all UK residents will be taxed on the arising basis of assessment. A four-year foreign income and gains (FIG) regime will be implemented. The new FIG regime will be available to individuals for their first four years of UK tax residence after a period of ten years of non-residence. Individuals who make a claim to use the four-year FIG regime will not pay tax on foreign income or foreign gains arising in those four years.
Also, the government is introducing a new Temporary Repatriation Facility (TRF) allowing individuals previously taxed on the remittance basis to designate amounts derived from pre-6 April 2025, and pay a reduced tax rate for a period of three tax years, starting from 2025/2026.
Capital gains tax
The lower rate of capital gains tax (CGT) on the sale of assets will increase from 10% to 18%; and the higher rate will increase from 18% to 24%. CGT on the sale of residential property will also increase from 18% to 24%.
Inheritance tax
Inheritance tax (IHT), which is currently 40%, is usually paid on the value of a deceased person’s assets above a threshold of £325,000. This threshold has been prolonged to 2030. From April 2027, inherited pensions will be included in the estate liable for inheritance tax, bringing them into the inheritance tax net. This measure is estimated to affect 8% of estates.
There will be reforms to the inheritance tax relief for business and agricultural assets, ensuring that amounts above £ 1 million will be liable for inheritance tax at 20%.
Stamp duty
From 31 October 2024 the stamp duty surcharge for second homes, (the higher rate for additional dwellings) is to increase by two percentage points to 5%.
VAT
VAT will be introduced on private school fees from January 2025 and business rates relief for private schools will be removed from April 2025.
Other
- Fuel duty will be frozen for two more years, with the existing 5p cut maintained;
- A new tax of £2.20 per 10ml of vaping liquid will be introduced from next October;
- Excise duty on tobacco is to increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco;
- Excise duty on non-draught alcoholic drinks is to increase by the higher RPI measure of inflation, but duty on draught drinks is cut by 1.7%;
- Air passenger duty on private jets will rise by 50%;
- The levy on sugar sweetened drinks will increase in line with inflation each year;
- The oil profits levy will be increased to 38% and extended;
- The tax on the carried interest, affecting private equity managers, will rise from 28% to 32% from April 2025.
The minimum wage for people 21 and over will increase by 6.7% to GBP 12.21 an hour. For workers aged 18 to 20 the minimum wage is to increase by 16.3% to GBP 10 per hour.
