The Autumn Budget 2024
Autumn Budget Summary
Below is a summary of the key announcements made by the new Chancellor, Rachel Reeves, in her first Budget speech to Parliament on 30 October 2024.
Reeves was faced with the challenge of balancing fiscal prudence with necessary tax reforms, supporting businesses, and ensuring improved public services. At the same time the Chancellor needed to fill the much vaunted £40 billion ‘black hole’ in the nation’s finances left by her predecessors.
This summary outlines the significant fiscal changes from the Autumn Budget, reflecting the government's priorities and challenges ahead.
Personal Tax
Income Tax
No changes to Income Tax rates or thresholds were made. The higher (40%) and additional (45%) rates are frozen until April 2028. This means that more people are becoming liable to pay Income Tax at higher rates. The Chancellor confirmed that Income Tax thresholds will start to increase again from April 2028.
Capital Gains Tax (CGT)
Increases in the CGT rates were announced with effect from the Budget date, 30 October 2024. The main CGT rates have increased from 10% and 20% to 18% and 24%, respectively. The 18% rate applies to gains that fall to be taxed at the Income Tax basic rate band and the 24% rate to gains that fall to be taxed at the higher rate bands.
The rate of CGT for Business Asset Disposal Relief (BADR) and Investors’ Relief is increasing to 14% for disposals made on or after 6 April 2025, and to 18% for disposals on or after 6 April 2026. The £1 million limit for BADR remains unchanged.
The Investors’ Relief lifetime limit will be reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024.
No changes were made to the 18% and 24% rates of CGT that currently apply to residential property gains.
National Living Wage (NLW)
The NLW, which applies to workers aged 21 and over, will increase to £12.21 per hour from April 2025, marking a rise from its current rate of £11.44.
National Minimum Wage (NMW)
The NMW for 18 to 20-year-olds will increase from £8.60 to £10 per hour from next April. The increase in the 18 to 20-year-old rate narrows the gap between the NMW and the NLW. The NLW rate may be extended to 18-20 year-olds in future years.
High Income Child Benefit Charge
Plans to base the High Income Child Benefit Charge (HICBC) on household income will not proceed. 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 will pre-prepopulate self-assessment tax returns with Child Benefit data for those not using this service.
Starting rate for savings
Legislation will be introduced to maintain the 0% band for the starting rate for savings income at its current value of £5,000 for tax year 2025-26. This measure will apply to the whole of the UK.
National Insurance rates and thresholds
The Class 2 and Class 3 National Insurance contributions will be adjusted using the September CPI rate of 1.7% for the tax year 2025-26.
The Class 1 Lower Earnings Limit and Class 2 Small Profits Threshold will also be uprated by September CPI for the 2025-26 tax year.
Inheritance Tax
The Inheritance Tax (IHT) nil-rate bands are already set at current levels until 5 April 2028. The government will introduce legislation in Finance Bill 2024-25 to fix these levels for a further 2 years until 5 April 2030.
This means that the nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million.
Qualifying estates can continue to pass on up to £500,000, and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability.
Unused pension funds and death benefits will be included in estates for Inheritance Tax purposes from 6 April 2027.
Agricultural Property Relief and Business Property Relief
The government will reform these reliefs from 6 April 2026. The existing 100% rates of relief will be maintained for the first £1 million of combined agricultural and business property.
The relief rate will be 50% thereafter and in all circumstances, for shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM.
Making Tax Digital for Income Tax and Self-Assessment
Making Tax Digital (MTD) for Income Tax will be expanded to sole traders and landlords with income over £20,000 by the end of the current Parliament. The exact timing of this move will be set out in the future.
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
Help to Save Scheme
The Help to Save Scheme will be extended for two years from April 2025 with the 5 April 2027 being the final date a new scheme can be opened.
From 6 April 2025, the eligibility of the scheme will be extended to all individuals in receipt of Universal Credit earning £1 or more.
ISA, Junior ISA, Lifetime ISA and Child Trust Funds
The annual subscription limits for ISAs, Junior ISAs, Lifetime ISAs, and Child Trust Funds will remain unchanged until April 2030 as follows:
- ISAs will remain at £20,000 until April 2030
- Junior ISAs will remain at £9,000 until April 2030
- Lifetime ISAs will remain at £4,000 until April 2030
- Child Trust Funds will remain at £9,000 until April 2030
Non-Dom Tax Rules
New restrictions will significantly tighten non-domiciled tax rules from April 2025. These changes will limit non-domiciled tax benefits to an initial four years of UK residency for those previously non-resident, potentially broadening the tax base.
From 6 April 2025, the government will introduce a new residence-based system for Inheritance Tax and the previously announced measure to introduce a 50% reduction in foreign income subject to tax in the first year of the new regime has been cancelled.
Abolition of Furnished Holiday Lettings Tax Regime
As previously announced, the tax benefits for Furnished Holiday Lettings (FHL) will end from April 2025.
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.
Business Tax
Corporation Tax charge and rate
There are no proposed changes to Corporation Tax rates. The Corporation Tax main rate will remain at 25% and the small profits rate at 19%. It was also confirmed that the government would cap the headline rate of Corporation Tax at 25% for the duration of Parliament and also retain the small profits rate and marginal relief at the current rates and thresholds.
Employers’ National Insurance Contributions (NIC)
The main rate of employer’s secondary rate (Class 1) NIC will increase by 1.2% from 13.8% to 15% from April 2025. Class 1A contributions (that apply to benefits in kind) and Class 1B contributions will increase by the same amount.
In addition, from 6 April 2025 until 5 April 2028, the threshold at which Employers’ contributions will apply will reduce from £9,100 to £5,000. In future years, this threshold will increase in line with the Consumer Price Index.
In a more positive move, the Employment Allowance (for small businesses) will increase from £5,000 to £10,500. In addition, 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 is to be removed.
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.
Taxation of company cars
The appropriate percentages for zero emission and electric vehicles will increase by 2% per year in 2028-29 and 2029-30, rising to an appropriate percentage of 9% in tax year 2029-30.
Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in the 2028-29 tax year and to 19% in the 2029-30 tax year.
Appropriate percentages for all other vehicle bands will increase by 1% per year in tax years 2028-29 and 2029-30. This will be to a maximum appropriate percentage of 38% for tax year 2028-29 and 39% for tax year 2029-30.
Van and car benefit charges
The van and car benefit rates will be increasing 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 the 2025-26 tax year
- the van fuel benefit charge will be £769 in the 2025-26 tax year
- the car fuel benefit charge multiplier will be £28,200 in the 2025-26 tax year
The government will introduce the necessary legislation by statutory instrument in December 2024 to ensure the changes are reflected in tax codes for tax year 2025-26.
Taxation of employee ownership
Reforms will ensure that Employee Ownership Trusts remain focused on encouraging employee ownership and rewarding employees whilst at the same time preventing opportunities for abuse. The changes will take effect from 30 October 2024.
Capital allowances for zero-emission cars and electric vehicle charging points
The 100% first-year allowances for zero-emission cars and electric vehicle charge-points have been extended until 31 March 2026 for Corporation Tax, and to 5 April 2026 for Income Tax.
Additional tax relief for visual effects (VFX)
Film and high-end TV companies will be able to claim an enhanced 39% rate of Audio-Visual Expenditure Credit (AVEC) relief on their UK visual effects (VFX) costs. UK VFX costs will be exempt from the AVEC’s 80% cap on qualifying expenditure. The changes will take effect from 1 April 2025, for expenditure incurred on or after 1 January 2025.
VAT & Duties
VAT on private school fees
Starting on 1 January 2025, private school fees will be subject to 20% VAT. The same date will also see the removal of charitable rates relief on private schools. These measures had been previously announced.
Stamp Duty Land Tax
The government will increase the higher rates of Stamp Duty Land Tax (SDLT), payable by purchasers of additional dwellings from 3% to 5% above the standard residential rates. The government will also increase the rate of SDLT payable by companies and non-natural persons acquiring dwellings for more than £500,000, from 15% to 17%. The changes apply to transactions with an effective date on or after 31 October 2024.
Fuel Duty rates
The 5 pence cut in the rates of Fuel Duty, first introduced at Spring Statement 2022, will be extended to 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.
Air Passenger Duty (APD)
The reduced rates for economy passengers will increase in line with RPI, rounded to the nearest pound. This means that domestic and international short-haul economy rates will remain unchanged from 2024-25. The standard and higher rates will be further increased to help account for recent high inflation.
For 2026-27, all rates will be increased by 13%, rounded to the nearest pound, to account in part for previous high inflation and to help maintain the value of APD rates in real terms. The higher rates that apply to larger private jets will increase by a further 50%. The new rates will apply from 1 April 2026.
Tobacco Duty rates
The duty rates for all tobacco products increased by the tobacco duty escalator of 2% above inflation (based on the Retail Price Index (RPI)). There was an additional increase in the rate for hand-rolling tobacco by 10% above the escalator, to 12% above RPI. The changes took effect at 6pm on 30 October 2024.
Vaping Products Duty (VPD)
A new duty of £2.20 per 10ml of vaping liquid will be introduced from 1 October 2026. Alongside the introduction of a vaping products duty there will be an equivalent increase in tobacco duties.
Alcohol duty uprating
The alcohol duty rate on draught products is to be reduced slightly. It is expected that this will reduce the price of an average strength pint by 1p per pint.
Alcohol duty rates on non-draught products will increase in line with RPI inflation from 1 February 2025.
Updated 1st November 2024
