Last Updated: October 30, 2024
Budget October 2024
Today, on 30 October 2024, Chancellor of the Exchequer Rachel Reeves delivered the first budget speech of the Labour Government since it was elected in July this year. The speech was historic in that it was the first ever budget speech delivered by a woman.
The backdrop to the speech has been , it is fair to say, unsettled, with promises not to increase taxes on “working people” forming a central plank of the Labour election manifesto, the reported discovery of an unexpected “black hole” in the UK finances, a funding and productivity crisis in the NHS, crumbling infrastructure in the state education system and elsewhere, the movement towards “Net Zero”, stalled investment into the UK, high national debt and the highest tax burden seen for many decades.
This note outlines some of the major tax announcements made in the speech. As ever, the devil is in the detail, and we will examine that as it becomes clearer and approach clients on a case-by-case basis in relation to matters that will have an effect on them in the short to long terms.
In the meantime, if you have any concerns or questions on any of the matters raised in the budget, please do not hesitate to contact us either by email or telephone or via our website www.certius.co.uk
With all best wishes
Ian and the Certius team.
Income Tax
No changes other than the abolition of the “Non-Dom” Tax scheme and the introduction of a residence-based approach to taxation.
Earnings thresholds will not be frozen beyond 2028/29 (as announced by the previous government).
EIS and VCT schemes remain unchanged.
National Insurance
No increase in employee National Insurance Contributions
The rate of Employers National Insurance Contributions increased to 15% and the earnings threshold for paying employers contributions is reduced from £9,100 to £5,000
The Employers Allowance is increased to £10,500 from £5,000.
Capital Gains Tax
Lower rate of Capital Gains Tax is raised to 18% (from 10%) and the higher rate is raised to 24% (from 20%)
Capital Gains Tax on carried interest increased to a rate of 32%
Business Asset relief remains unchanged.
Inheritance Tax
Inheritance Tax thresholds remain frozen until 2030.
From April 2027 inherited pensions will become liable to Inheritance Tax.
Business property and Agricultural Property Relief has been amended, with full relief on the first £1m and then 50% relief on assets valued over £1m (an effective tax rate of 20%).
Corporation Tax
No major changes
Stamp Duty and Stamp Duty Land Tax
SDLT surcharge on second homes is increased to 5% with immediate effect.
VAT
No increase in the rate of VAT
VAT on private school fees confirmed with effect from January 2025
Duties on Fuel, Alcohol, Tobacco, Soft Drinks and Air Passengers
No increases in fuel duty
Duty introduced on vaping products, together with an increase in tobacco duty and the soft drinks levy.
Duty on tobacco products to rise by 2%, hand rolled tobacco duty rates will increase by 10%
Air Passenger Duty, increased by no more than £2 for economy class flights. For private flights there will be an increase in duty of 50%,
Duty on draft products reduced by 1.7% and increased by RPI on non-draft products.
Other matters
Business rate relief for private schools to be removed from April 2025.
There will be increased focus on and staffing of the collection of unpaid tax debts and the interest rate on unpaid tax will be increased.
The National Living wage increase to £12.21 per hour with a move to standardising the National Minimum wage for all age groups.
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