Today our financial planning team gathered to watch Chancellor Rachel Reeves present her 2024 Autumn Budget. Four months on from Labour’s election win, her focus remains on stabilising the economy while working towards Labour’s long-term goals for “a decade of renewal.”
Reeves’ first Budget prioritises investment and outlines plans to raise taxes by £40 billion—measures she says reflect “economic reality.” While Labour has pledged no increases to Income Tax, employee National Insurance, or VAT, some of the changes announced will have a very specific impact depending on individual circumstances. For our existing clients, we’ll cover any relevant updates during your next Progress Meeting.
Here’s a summary of key Budget measures and what they might mean for you:
Capital Gains Tax Reforms
Effective immediately, Capital Gains Tax (CGT) rates have increased, with the basic rate now at 18% and the higher rate at 24%. Additionally, CGT on carried interest will see further rises from 2025, along with changes to Business Asset Disposal Relief and Investors’ Relief. These adjustments could impact clients with investment portfolios or business assets. Strategic planning is key, particularly with further rate increases stated for 2025 and 2026.
Stamp Duty Land Tax on Second Homes
The Stamp Duty surcharge on second home purchases has risen from 3% to 5%, effective immediately. For clients considering property investments, our advisers are available to help you navigate this change to optimise your planning.
Employer National Insurance Contribution Increases
Starting April 2025, employer National Insurance (NI) contributions will increase by 1.2%, and the threshold will reduce from £9,100 to £5,000. To support businesses, the Employment Allowance threshold will double to £10,500, with the previous eligibility cap of £100,000 removed. Clients managing businesses may want to review allowances and payroll strategies to prepare for these changes.
Income Tax Threshold Freeze Ends in 2028
The freeze on Income Tax thresholds will end in 2028, after which rates will align with inflation. This could offer relief for higher earners, as previous freezes effectively raised tax burdens year by year.
State Pension Triple Lock Adjustment
From April 2025, retirees will see the state pension rise by 4.1%, amounting to an additional £471 per year. Part of the government’s commitment to the triple lock, this increase aims to support those on fixed incomes. We’ll work with our retirement clients to understand how this increase could support their financial security.
Inheritance Tax Relief Changes
Changes to Inheritance Tax (IHT) reliefs include an extension of the freeze on nil-rate bands until 2030 and adjustments to Agricultural and Business Property Reliefs, impacting clients with high-value agricultural and business assets.
Unused Pension Funds Subject to IHT from 2027
From April 2027, unused pension funds and death benefits will be included in the estate for IHT purposes, impacting clients who have relied on pensions for tax-efficient estate planning. While specifics are still being determined, our advisers are closely monitoring developments to help you understand any implications and protect your legacy.
Upcoming Review of Domicile Rules
From 2025, the government will review domicile rules for IHT and income tax, potentially moving toward a residence-based system. For clients with complex tax statuses, we’ll keep you informed about any impact on tax planning strategies if these changes apply to you.
VAT on Private School Fees
VAT will apply to private school fees from January 2025, a shift that could affect budgeting for education. Our advisers are here to help you explore options for forward planning and managing this additional expense effectively.
No Immediate Action Required—We're Here to Help
Our main message today is: stay calm, and avoid quick decisions. With many changes announced, a measured approach is best. For sensitive areas like gifting, where specific steps may apply, it’s essential to avoid knee-jerk actions. We’ll always tailor our advice to suit your needs, so it’s best to speak with us to ensure you’re on the right track.
For existing clients, rest assured we’ll discuss any relevant changes with you directly. If you’re not yet a client, feel free to get in touch for a consultation. We’d be delighted to help you make sense of these changes and plan for your future.
For a light-hearted end, we should note that draught beer duty has been cut by 1.7%. Julie in the team was hoping to see G&Ts available on draught soon too – here’s hoping for the next Budget!
Please NoteThis summary is for informational purposes only and should not be considered financial advice. For personalised guidance on how these changes might impact your financial or business plans, please reach out to our team.
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