Autumn Budget 2024 – What Does it All Mean?

While the Autumn Budget didn't deliver the severe blows some anticipated, it’s still not particularly favourable for business owners, landlords, or high-net-worth individuals. Here’s a breakdown of the main changes affecting our core clients.

For Employers (Including Sole Director Companies)

Increase in Employer’s National Insurance (NI)

What’s Changing: Starting April 6, 2025, the main rate of employer NI will rise to 15%. However, the Employment Allowance will increase from ￡5,000 to ￡10,500 for employers.

Impact:??

Sole Directors: Sole director companies that do not qualify for the Employment Allowance will see an increase in NI costs, amounting to an extra ￡615 annually from April 2025. Consider options like paying family members who assist with small tasks to qualify for the allowance.?

Other Employers: This NI increase will strain payroll budgets, especially for employers with costs exceeding ￡10,500 annually. Here are examples of potential increases:?

These hikes will require businesses to adjust prices and improve operational efficiencies to manage increased costs.?

Minimum Wage Increases

Employees aged 18-20 on a 35-hour work week will see wages increase from ￡8.60 to ￡10 per hour, resulting in an additional annual cost of ￡3,006 (inclusive of NI and pension contributions). These rising costs may cause some employers to lose their eligibility for the Employment Allowance.?

Double Cab Pickup Trucks

Though not a primary announcement, HMRC confirmed that double cab pickup trucks purchased after April 5, 2025, will be classified as cars rather than vans. Transitional arrangements apply until April 2029.

Business Owners

Capital Gains Tax

Both the main rates of Capital Gains tax and gains where Business Asset Disposal Relief applies have increased. ?This still remains at 10% of the first ￡1million of qualifying gains until 5th April 2025. ?For a business owner selling a company for ￡2 million, this change equates to an additional ￡120,000 in tax, rising to ￡280,000 for a ￡6 million sale.

Inheritance Tax

Starting April 6, 2025, Business Property Relief and Agricultural Property Relief will be capped at a combined allowance of ￡1 million, with relief on values exceeding this reduced to 50%. For example, a business owner with ￡2 million in business assets could face a potential IHT liability of ￡200,000. Adding pension assets to the estate could further increase IHT liabilities.

Landlords

Capital Gains Tax

The CGT rate on residential properties remains unchanged, but rates for commercial property gains will rise to 18% and 24%.

Stamp Duty Land Tax (SDLT)

The SDLT surcharge for additional properties will increase from 3% to 5%.

Furnished Holiday Let (FHL) Reforms ?

From April 5, 2025, FHL properties will face new restrictions:

• Interest and finance charges will only qualify for basic rate tax relief.
• Capital allowances will be replaced by domestic items relief.
• FHL properties will no longer be considered trading assets for CGT purposes. ?

For High-Net-Worth Individuals

As well as the changes for business owners above:?

Capital Gains Tax

CGT rates have increased to 18% and 24% from the previous 10% and 20%, effective October 30, 2024. With changes to Business Asset Disposal Relief and Investors’ Relief, the timing of asset disposals will require careful planning.

Inheritance Tax

Unused pension funds will now be included in the estate for IHT purposes. For example, an estate containing ￡500,000 in pension funds could incur a potential IHT liability of ￡200,000. Updated estate planning will be crucial to mitigate these impacts.

Join us for a more detailed analysis of these changes in our upcoming webinars:?

• General Update: November 14 at 12:00pm

• Landlords’ Update: December 3?at 12:00pm