BUDGET 30 October 2024
Changes to the Capital Gains Tax (CGT) rates
As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to increase the main rates of Capital Gains Tax (CGT) from 10% and 20% to 18% and 24% respectively. The change will take effect for disposals made on or after 30 October 2024. There is no change to the rates for disposal of residential property – 18% and 24%.
The rate of CGT for Business Asset Disposal Relief and Investors’ Relief is increasing to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026.
Corporate Tax
Corporation Tax charge and rate
The government will introduce legislation in Finance Bill 2024-25 to set the charge for Corporation Tax as it does every year, and to maintain the main rate at 25% and the small profits rate at 19%, for the financial year beginning 1 April 2026.
Stamp Duty Land Tax — increase to the higher rates on additional dwellings (and the single rate of tax on purchases by non-natural persons)
As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to increase the higher rates of Stamp Duty Land Tax (SDLT), payable by purchasers of additional dwellings and by companies, from 3% to 5% above the standard residential rates. The government will also increase the single rate of SDLT payable by companies and non-natural persons acquiring dwellings for more than £500,000, from 15% to 17%.
The changes will apply to transactions with an effective date on or after 31 October 2024.
First-time buyer nil-rate stamp duty threshold will be reduced from £425,000 to £300,000 from April 2025, and for non-first-time buyers from £250,000 to £125,000.
Abolition of Furnished Holiday Lets (FHL) tax regime
As announced in July 2024, the government will introduce legislation in Finance Bill 2024-25 to remove the specific tax treatment and separate reporting requirements for Furnished Holiday Lettings (FHL).
Income and gains from a FHL will form part of the person’s UK or overseas property business. These changes will take effect on or after 6 April 2025 for Income Tax and Capital Gains Tax and from 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains.
The tax information and impact note for this measure provides more information: Furnished holiday lettings tax regime abolition
Capital allowances — extending first-year allowances for zero-emission cars and electric vehicle charge-points
As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to extend the 100% first-year allowances for zero-emission cars and electric vehicle charge-points until:
- 31 March 2026 for Corporation Tax
- 5 April 2026 for Income Tax
Taxation of company cars — the appropriate percentage for tax years 2028 to 2029 and 2029 to 2030
· As announced at Autumn Budget 2024, the government is setting company car tax rates for tax years 2028 to 2029 and 2029 to 2030.
· Appropriate percentages for zero emission and electric vehicles will increase by 2 percentage points per year in 2028 to 2029 and 2029 to 2030, rising to an appropriate percentage of 9% in tax year 2029 to 2030.
· Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in tax year 2028 to 2029 and 19% in tax year 2029 to 2030.
· Appropriate percentages for all other vehicle bands will increase by 1 percentage point per year in tax years 2028 to 2029 and 2029 to 2030. This will be to a maximum appropriate percentage of 38% for tax year 2028 to 2029 and 39% for tax year 2029 to 2030.
Indirect Tax
VAT on private schools
· As announced in July 2024, the government will introduce legislation in Finance Bill 2024-25 to remove the VAT exemption on private school fees.
· From 1 January 2025, all education services and vocational training provided by a private school or connected person in the UK for a charge will be subject to VAT at the standard rate of 20%. Pre-payments of fees or boarding services on or after 29 July 2024 that relate to terms starting after 1 January 2025 will also be subject to VAT at the standard rate. The changes will take effect from 30 October 2024.
National Insurance contributions rates and thresholds
As announced at Autumn Budget 2024, the government will use the September Consumer Prices Index (CPI) figure of 1.7% as the basis for uprating the Class 2 and Class 3 National Insurance contributions for the tax year 2025 to 2026. The Class 1 Lower Earnings Limit and Class 2 Small Profits Threshold will also be uprated by September CPI for the 2025 to 2026 tax year.
These changes will be made by secondary legislation that will be laid before parliament ahead of April 2025.
Most National Insurance limits and thresholds will be maintained at 2024 to 2025 levels, until 5 April 2028. Details can be found within Annex A.
Extension of National Insurance Contributions relief for hiring veterans
As announced at Autumn Budget 2024, the government is extending the employer National Insurance contributions relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026.
This means that businesses will continue to pay no employer National Insurance contributions up to annual earnings of the Veterans Upper Secondary Threshold of £50,270 for the first year of a veteran’s employment in a civilian role. The government will extend the relief through secondary affirmative legislation ahead of April 2025.
Changes to secondary Class 1 (employers’) National Insurance — reducing the secondary threshold, increasing the rate and changes to the Employment Allowance
As announced at Autumn Budget 2024, the government will introduce legislation to reduce the Class 1 National Insurance contributions secondary threshold, from £9,100 to £5,000 per annum. This will take effect from 6 April 2025 until 5 April 2028.
Thereafter, the secondary Class 1 National Insurance contributions threshold will be increased in line with the Consumer Price Index (CPI).
The government will introduce legislation to increase the main rate of secondary Class 1 National Insurance contributions from 13.8% to 15%. The Class 1A and Class 1B employer rates will also increase in line with this.
The government will also introduce legislation to increase the Employment Allowance from £5,000 to £10,500 and remove the restriction that currently applies to the Employment Allowance, where only employers who have incurred a secondary Class 1 National Insurance contributions liability of less than £100,000 in the tax year prior are able to claim.
This will take effect from April 2025 and will mean eligible employers will be able to reduce their National Insurance contributions liabilities by up to £10,500 per year.
These changes will be introduced by primary legislation ahead of 6 April 2025.
Inheritance tax — unused pension funds and death benefits
As announced at Autumn Budget 2024, the government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes from 6 April 2027.
As part of these changes, pension scheme administrators will become liable for reporting and paying any inheritance tax due on unused pension funds and death benefits.
ISA, Junior ISA, Lifetime ISA and Child Trust Fund annual subscription limits
As announced at Autumn Budget 2024, the annual subscription limit for:
- ISAs will remain unchanged at £20,000 until April 2030
- Junior ISAs will remain unchanged at £9,000 until April 2030
- Lifetime ISAs will remain unchanged at £4,000 until April 2030
- Child Trust Funds will remain unchanged at £9,000 until April 2030
These measures will apply to the whole of the UK.
Annual uprating of the van benefit charge and the car and van fuel benefit charges for tax year 2025 to 2026
As announced at Autumn Budget 2024, the government will be increasing the van benefit charge and the car and van fuel benefit charges using the September 2024 Consumer Prices Index (CPI).
The following new rates will come into effect from 6 April 2025:
- the van benefit charge will be £4,020 in tax year 2025 to 2026
- the van fuel benefit charge will be £769 in tax year 2025 to 2026
- the car fuel benefit charge multiplier will be £28,200 in tax year 2025 to 2026
The government will introduce legislation by statutory instrument in December 2024 to ensure the changes are reflected in tax codes for tax year 2025 to 2026.
Confirming plans to mandate the reporting of benefits in kind by payroll software from April 2026
The government confirmed at Autumn Budget 2024 that the use of payroll software to report and pay tax on benefits in kind will become mandatory, in phases, from April 2026. This will apply to Income Tax and Class 1A National Insurance contributions. This was first announced by the previous government in the January 2024 simplification update.
A technical note has been published which provides further clarification on plans for mandatory payroll reporting. The technical note confirms that, from April 2026, it will be mandatory to payroll all benefits in kind, except for employment related loans and accommodation. Payrolling for these 2 benefits will be introduced on a voluntary basis from April 2026 and the government will set out the next steps on when they will be mandated in due course.
IHT
Agricultural Property Relief and Business Property Relief
As announced at Autumn Budget 2024, the government will reform these reliefs from 6 April 2026. The existing 100% rates of relief will continue for the first £1 million of combined agricultural and business property.
The rate of relief will be 50% thereafter, and in all circumstances for shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM.
The government will publish a technical consultation by early 2025, and a summary of the changes has been published alongside Autumn Budget 2024.
High Income Child Benefit Charge (HICBC) reform, simplification and targeting of economic support to households
As announced at Autumn Budget, the government will not proceed with the reform to base the High Income Child Benefit Charge (HICBC) on household incomes. To make it easier for all taxpayers to get their HICBC right, the government will allow employed individuals to report Child Benefit payments through their tax code from 2025, and pre-prepopulate Self Assessment tax returns with Child Benefit data for those not using this service.
Tax treatment of double cab pick-up vehicles
As announced at Autumn Budget 2024 and following a Court of Appeal decision, the government will not introduce legislation to maintain the treatment of double cab pick-up vehicles with a payload of one tonne or more as goods vehicles.
Fuel Duty rates
As announced at Autumn Budget 2024, the government will introduce legislation by Statutory Instrument in 2025 to extend the 5 pence cut in the rates of Fuel Duty first introduced at Spring Statement 2022.
The 5 pence cut will now expire on 22 March 2026. This will maintain the cut for a further 12 months in the rates for heavy oil (diesel and kerosene), unleaded petrol, and light oil by 5 pence per litre, and the proportionate percentage cut (equivalent to 5 pence per litre from the main Fuel Duty rate of 57.95 pence per litre) in other lower rates and the rates for rebated fuels, where practical.
Tax administration and other measures
Changing late payment interest rates on unpaid tax liabilities
As announced at Autumn Budget 2024, the government will increase the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5 percentage points.
This measure will take effect from 6 April 2025.
Making Tax Digital (MTD) for Income Tax — lowering the mandation threshold
Making Tax Digital (MTD) for Income Tax will be extended to sole traders and landlords with income over £20,000 by the end of this Parliament. The precise timing of this will be set out at a future fiscal event. This expands the rollout of MTD for Income Tax, which will begin from:
- April 2026 for sole traders and landlords with income over £50,000
- April 2027 for those with income over £30,000
Business rates
Discussion paper – The government has published a Business Rates discussion paper with the stated aim of reforming business rates to protect the high street, encourage investment; and create a fairer system.
Small business multiplier – For 2025-26, the small business multiplier in England will be frozen at 49.9p. The standard multiplier will be uprated by the September 2024 CPI rate to 55.5p.
RHL properties – For 2025-26, the existing 75% relief for eligible Retail, Hospitality and Leisure (RHL) properties in England will be replaced by a 40% relief, which will continue to be limited to a maximum discount of £110k. Starting from 2026-27, the government will implement permanently lower multipliers for RHL properties, offset by a higher multiplier for properties with Rateable Values above £500,000.
Min Wage
6.7% rise in the minimum wage next year from April 2025 from £11.44 to £12.12 an hour.
Pension Tax Relief
No change
