On the 30th of October 2024, the new Labour government delivered the first Labour Budget for 14 years. The Autumn Budget 2024 has been described as the most consequential budget for generations by numerous observers.
We have summarised some key announcements across Abbiss Cadres disciplines:
National Insurance
The Chancellor has announced an increase in the employer rate of National Insurance (Secondary Contributions) by 1.2% to 15% from April 2025.
At the same time, there is a reduction in the Secondary Threshold (the threshold from which the Secondary Contributions apply per employee as payable by employer) to £5,000 per year, down from £9,500 per year.
From 6th of April 2025, employers will face a National Insurance bill of £11,250 for an employee earning £80,000 per year, as compared to £9,784.20 in 2024/25.
Employment Allowance
The Chancellor announced an increase in the Employment Allowance (the Employment Allowance is a reduction of annual employers’ National Insurance liability) from £5,000 to £10,500 from the 6th of April 2025.
Previously, where an employer’s total Employer National Insurance bill for 2024/25 was £20,000 – it would have been reduced to £15,000 (because of the £5,000 Employment Allowance). Under the new Employment Allowance – a £20,000 employer’s total Employer National Insurance bill for 2025/26 would be reduced to £9,500. This change appears intended to reduce the impact on small businesses of the increase in the rate of Employer National Insurance and the lowering of the Secondary Threshold.
Capital Gains Tax
Headline rates for Capital Gains tax for assets other than residential property have increased with immediate effect from 10% to 18% for Basic Rate taxpayers and from 20% to 24% for Higher and Additional Rate taxpayers, for disposals of assets on or after 30 October 2024. The current rates of 18% and 24% for residential properties will remain.
While the Business Asset Disposal Relief will remain, the rate of tax will increase to 14% from 6 April 2025 and 18% from 6 April 2026.
Carried Interest
The Chancellor has announced a rate of 32% from April 2025 on carried interest, with further reform intended in subsequent years.
Employee Ownership Trusts
Employee Ownership Trusts are a form of trust that allows business owners to sell their business to a trust set up for the business’ employees, and be exempt from capital gains tax on the sale provided certain conditions are met.
Following a recent consultation exercise, the Chancellor announced that changes will be made to the legislation governing Employee Ownership Trusts:
(a) ensure that the former business owners do not retain effective control of the business through their influence on the trust,
(b) require the trust to be UK resident for tax purposes, and
(c) require that reasonable steps are taken to ensure that the trust does not overpay for the business.
Certain other administrative changes will also be made, which should clarify some current areas of uncertainty.
Company cars
It was confirmed that the current incentives for Electric Vehicles will remain as regards to the taxation of employment income (i.e. where an electric vehicle is provided as a company car benefit).
Non-Domiciled and Foreign Income and Gains regime
The government will proceed with the abolition the non-domiciled tax regime from April 2025, however a new residence based scheme with ‘internationally competitive arrangements’ for those coming to the UK temporarily will apply.
The Chancellor announced that the temporary repatriation relief will be expanded both in its scope and to a longer period of 3 years.
Our expectation is that the measures announced in the Autumn Budget will broadly line up to the Spring 2024 Budget and the ‘Foreign Income and Gains’ regime, with additional tweaks (such as the longer temporary repatriation relief and additional anti-avoidance measures).
Interest rate on unpaid tax
The Government will increase the interest rate charged on unpaid tax. This is currently set as 2.5% above the Bank of England base rate.
Investment in HMRC
The Chancellor announced additional funding for HM Revenue & Customs to both update its technological capabilities and improve their ability to monitor compliance.
Income tax rate thresholds freeze to continue until 2028/29
The Government will continue the existing freeze on Income Tax rate bands & thresholds until 2028/29, but those bands and thresholds will thereafter be raised in line with inflation.
