As the 2024 Chancellor’s Budget unfolds, our Tax Partner, Marc Dorsett, will be listening in and updating this guide to provide commentary and analysis on key tax changes, helping to clarify the implications of the budget on your finances and the broader economy.

The annual budget presentation outlines the government’s financial plans for the coming year, detailing key policies, spending priorities, and tax changes that could significantly impact individuals, property owners and businesses alike. This year, Capital Gains Tax (CGT), Inheritance Tax (IHT), and Stamp Duty Land Tax (SDLT) are expected to be central to the discussion. In this article will provide real-time updates on the Chancellor’s speech, breaking down what these announcements mean for you. Stay tuned for continuous updates as we navigate the developments of this pivotal event and find out what tax is being lowered, what is being frozen and what’s rising.

Summary

  • Employers NIC to increase by 1.2% in April.
  • The end of 2024 will see an increase NIC employment allowance for small businesses.
  • Budget 2024: CGT to increase for non-residential property.
  • IHT thresholds frozen for 2 more years.
  • Inherited pensions to become taxable for IHT.
  • APR/BPR reforms announced with £1M limit for full relief and 50% relief over this.

What this means

NIC Employment Allowance for Small Businesses to Increase

Taking effect from April 2025, the Chancellor has announced that the NIC Employment Allowance will increase from £5,000 to £10,500. For eligible employers who will pay National Insurance, this change will reduce their employer contributions by up to £10,500 per year. This represents an attempt to reduce the impact of employer’s NIC on small businesses.

Workers NIC, Income Tax and VAT is Not Changing

As promised by the Chancellor before the Budget, it has been confirmed that the rates of NIC, income tax and VAT for workers will not change. However, with the freeze in NIC and income tax thresholds until 2028, as implemented by the previous government, many people may not actually benefit from the freeze in rates due to inflation.

2% SDLT rate rise for additional properties

From 31 October 2024, the higher rate on additional dwellings SDLT surcharge is to increase from 3% to 5%. This applies to purchases where, at the end of the day of completion, the buyer owns more than one residential property.

The new rules generally apply where the effective date is on or after 31 October 2024. There are situations where an exchange before 31 October 2024 may still be caught by the rate changes.

The increase also applies to properties acquired by companies and certain trusts.

This represents a substantial increase to the purchase cost of a property, and it is important to consider if planning can help mitigate this.

Frozen inheritance tax thresholds extended for two more years.

The Nil Rate Band and Residence Nil Rate Band allowance relief will maintain their current figures of £325,000 and £175,000 respectively. This will mean each individual will have an allowance of up to £500,000 before taxed to IHT at 40%, provided they meet certain requirements. Each individual will at minimum be entitled to the Nil Rate Band relief of £325,000. For married couples and civil partners, the IHT allowance is still transferable and therefore between the two of them, there will be a maximum IHT allowance of £1,000,000 before the estate is taxed on second death. This has been extended until 5 April 2030 minimum.

With increasing property prices and inflation an individual may be more likely to be caught for IHT with the frozen rates, particularly if they are unmarried with no lineal descendants.

Increase in CGT rates

The rate of CGT for non-residential property or carried interest has increased from 10% to 18% for gains falling into the basic rate band, and 18% to 24% for gains at the higher rate.  This brings the rates in line for all asset disposals and takes effect for disposals made on or after 30 October 2024.

Capital gains made by trustees and personal representatives also see the rate increase to 24% from 30 October 2024.

Business Asset Disposal Relief (BADR) rates are also changing from 10%  to 14% for disposals made after 5 April 2025 and a further increase to 18% for disposals after 5 April 2026.

These increases can affect the tax payable by a fair margin and planning is evermore important to ensure tax is mitigated wherever possible.