2024 Budget: A New Dawn, or a Dead Duck?

The 2024 UK budget, perhaps the most consequential since the end of WWII, has finally been announced by the Rt Hon Rachel Reeves . Overall tax increases of ￡40bn and a reduction in public borrowing, will come with increased public investment. But what's the impact for businesses?

Is this a new dawn for UK commerce, or does the road ahead look bumpier than ever? Below we've summarised some of the key changes that could affect your business. See how your peers are reacting by voting in our poll.

Selected Key Points for Business

Business Asset Disposal Relief (previously Entrepreneur's Relief):

• The lifetime limit will be maintained at ￡1m. General Business Asset disposal relief will remain at 10% this year, but will rise to 14% in April 2025 - and to 18% in 2026.

Taxation of Private Equity Carried Interest:

• To increase to 32% from 28% in April 2025. Further reforms will be announced in 2026.

Capital Gains Tax (CGT):

• The lower rate will increase from 10% to 18%
• The higher rate will increase from 20 to 24%, with a roadmap to cap CGT at 25%.
• CGT on residential property will be maintained at 18 and 24%.
• The UK will still have the lowest CGT rate of any G7 economy.

Enterprise Investment and Venture Capital Trust (VCT) Schemes:

• Extended to 2035.

Employer's National Insurance (NI):

• The rate will increase by 1.2% to 15%. The secondary threshold (the level at which employers start paying) will fall from ￡9,100 to ￡5,000.

Non Dom Tax Regime:

• The scheme will be abolished from April 2025. Temporary repatriation relief will be extended for 3 years, which is estimated to bring ￡12.7bn to the UK economy.

Income Tax Thresholds:

• To be uprated inline with inflation from 2028/29.

Inheritance Tax:

• The thresholds will be extended to 2030, remaining at ￡325k tax free or ￡500k if the estate includes a residence bequeathed to relatives. The threshold will stick at ￡1m, in the case that estates are passed to a surviving spouse or partner. Inherited pensions will now be included in inheritance tax.

Agricultural and Business Property Relief:

• The first ￡1m of combined business and agricultural property will remain untaxed, but amounts above ￡1m will be taxed with a 50% relief at an effective rate of 20%. 50% relief will be applied in all circumstances for shares listed on AIM, with an effective rate of 20%.

Employment Allowance:

• To be reduced to ￡5,000, from ￡10,500.

National Living Wage:

• To increase by 6.7% to ￡12.21 per hour.

National Minimum Wage:

• To increase by 16.3% to ￡10 per hour.

Employee's National Insurance (NI):

• No increase.

Fuel Duty:

• Frozen. No increase on tax at the fuel pumps next year.

Stamp Duty Land Tax (SDLT):

• Increase from 3% to 5% for buyers of second homes.

Air Passenger Duty:

• To be increased by up to ￡2 on economy flights. 50% increase on private jet duty.

Business Rates for Retail Hospitality and Leisure Companies:

• 40% relief up to a cap of ￡110k per business. Small business tax multiplier will be frozen next year.

Alcohol Duty:

• Rates on non-draft products will go up by RPI, but draft alcohol will be cut by 1.7% (=￡0.01 off a pint).

Energy:

• Headline tax rate on oil and gas activities to rise to 78%, which is among the highest in the world. The 29% investment levy, which lets companies offset tax from capital that is re-invested, will be scrapped.

National Wealth Fund:

• New investment of up to ￡70bn across various industries and areas.

Vote in our poll to see how your peers are reacting - and join the conversation by sharing your opinion in the comments!

For more in-depth analysis, see reaction from the Financial Times here and from Reuters here.

By Zak Nason-Giwa, Co-Founder at Fundably - Instant Tailored Business Funding

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