ATTIVO
Autumn Budget 2024
On the 30 October, the Chancellor of the Exchequer, Rachel Reeves, unveiled the Autumn Budget 2024 amid a backdrop of economic uncertainty.
We have highlighted a few key subject areas of particular impact and how this may affect your lifestyle financial plan in this Autumn Budget analysis.
Capital Gains Tax
Increase to the 10% CGT Rate
The Government has implemented that the Capital Gains Tax (CGT) rate for basic rate taxpayers has increased from 10% to 18%. This means if you are a basic rate taxpayer, any gains you make from the sale of shares or investment funds (that are not shielded within a tax-efficient wrapper, such as an ISA), above the CGT allowance (currently £3,000 per person per tax year), will be subject to an increased tax liability.
Any disposals made prior to 30 October 2024 will be taxed at the rate of 10% for basic rate taxpayers. Any disposals on or after this date will be taxed at 18%.
Increase to the 20% CGT Rate
The Government has implemented that the Capital Gains Tax (CGT) rate for higher and additional rate taxpayers has increased from 20% to 24%. This means if you are a higher or additional rate taxpayer, any gains you make from the sale of shares or investment funds (that are not shielded within a tax-efficient wrapper, such as an ISA) above the CGT allowance (currently £3,000 per person per tax year), will be subject to an increased tax liability.
Any disposals made prior to 30 October 2024 will be taxed at the rate of 20% for higher and additional rate taxpayers. Any disposals on or after this date will be taxed at 24%.
Inheritance Tax
Extension to the freeze of Inheritance Tax thresholds
The Government has announced that the freeze on the Inheritance Tax thresholds, such as the Nil Rate band of £325,000 per person and the Main Residence Nil Rate band of £175,000 per person, will be extended by an additional 2 years, to 2030. This means that these thresholds will not be reviewed until this point.
Inheritance tax planning is not regulated by the Financial Conduct Authority (FCA).
Future Reduction in Agricultural and Business Relief
The Government has announced that from 6 April 2026, there will be a reduction in the amount of Agricultural Relief and Business Relief available on qualifying Business and Agricultural properties above £1 million. At that point, the current 100% relief will continue to be available for the first £1 million of combined Business and Agricultural property. However, the rate of relief will be 50% thereafter.
Inheritance tax planning is not regulated by the Financial Conduct Authority (FCA).
Reduction in IHT relief for AIM Shares
The Government has announced that from 6 April 2026, the rate of business relief that is applied to quoted shares, which are not listed on the markets of recognised stock exchanges, including AIM shares, will only be eligible for 50% relief for inheritance tax purposes.
Inheritance tax planning is not regulated by the Financial Conduct Authority (FCA).
Pensions
Unused pension funds payable to form part of estate from 2027
The Government has announced that from 6 April 2027, unused pension funds will be brought into a person’s estate for inheritance tax purposes. Pensions may no longer be the most tax efficient vehicle in which to accumulate assets to be passed on to a beneficiary. If this change affects your situation, your Financial Planner will discuss this with you during your next planning meeting.
Employer NI Contributions
Increase of employer NI from 13.8%
The Government has announced that Employer National Insurance Contributions will be increasing from 13.8% to 15%. In addition, the per-employee threshold at which employers become liable to pay National Insurance will reduce to £5,000. These changes are due to take effect from 6 April 2025. This will result in an increase payroll cost for all business owners.
Corporate services such as payroll administration is not an activity regulated by the FCA.
Stamp Duty
Increase on the surcharge on second properties
The Government has implemented that the current additional 3% Stamp Duty surcharge on second properties has now increased to 5%. This will result in an increased cost for anyone looking to purchase another property.
Remember your home may be repossessed if you do not keep up repayments on your mortgage.
Business Relief
Business Asset Disposal Relief rate increase and Reduction in Lifetime Limit for Investors’ Relief
The Government has announced that the Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs relief, will increase from 10% to 14% on 6 April 2025. Following this, BADR will increase to 18% from 6 April 2026, matching the lower rate of CGT. In addition, the lifetime limit for Investors’ Relief will be reduced to £1 million for all qualifying investments made on or after 30 October 2024. If you are in the process of selling a business, or thinking about selling your business, please contact your Financial Planner to discuss how this will impact the sale of your business.
General business advice is not regulated by the FCA.
Income Tax
Income tax threshold freeze to end in 2028
The Government has announced it will not extend the freeze to income tax and National Insurance contributions thresholds. From April 2028, these personal tax thresholds will be uprated in line with inflation.
We have highlighted the most important changes that were announced during the Autumn budget, but we are aware that the Government have also announced additional measures that might affect you. We will be following up on this article in due course to cover all of the important information, so please keep an eye on our website.
Please note that this communication is intended for information only. It is not financial advice or a recommendation and should not be considered as such.
As a client of Attivo paying for an ongoing service, you have access to your Financial Planner. Should you wish to discuss any of the changes made in the budget, please contact Client Services.