Today, Chancellor Rachel Reeves announced her 2024 Spring Budget where she summarised the UK economic performance and announced her proposals for tax.
In this budget, the chancellor announced that she will raise taxes by £40bn to increase government funding.
In this article, we have highlighted some of the key tax changes.
Employee National Insurance Contributions
From April 2025, Employer National Insurance Contributions will be increased by 1.2% to 15%. Furthermore, the threshold at which businesses will start paying National Insurance Contributions on a workers' earnings will be lowered from £9,100 to £5,000. This will result in Employers National Insurance Contributions increasing significantly from April 2025.
Employment Allowance
From April 2025, the Employment Allowance will increase from £5,000 to £10,500. The Employment Allowance is a government initiative aimed at small businesses to reduce their National Insurance liability.
Capital Gains Tax
With immediate effect, the lower rate of Capital Gains Tax on most assets is increased from 10% to 18% and the higher rate of Capital Gains Tax is increased from 20% to 24%.
However the Capital Gains Tax rates on residential property will remain at 18% and 24% respectively.
There are also changes for Business Asset Disposal Relief. The lifetime allowance remains at £1 million but the tax rate will increase from 10% for this tax year to 14% from 6 April 2025 and then 18% from 6 April 2026.
Inheritance Tax (pensions)
From April 2027, pensions will be brought into inheritance tax and pension scheme administrators will be responsible for reporting and paying inheritance tax to HMRC.
Inheritance tax
The inheritance tax threshold will be extended by a further two years to 2030. Furthermore there will be a reform to Agricultural Property Relief and Business Property Relief. From April 2026, there will be no inheritance tax on the first £1m of combined business and agricultural assets. But for assets over £1million, inheritance tax will apply with a 50% relief and a tax rate of 20%.
Stamp Duty Land Tax surcharge
From 31st October 2024 (tomorrow) there will be an increase in the Stamp Duty Land Tax surcharge for second homes from 2% to 5%.
Fuel duty
Fuel Duty rates will remain frozen for the 2025/26 tax year.
Income Tax and National Insurance threshold
The chancellor announced that she will increased Income Tax and National Insurance threshold in line with inflation in 2028/29.
Abolishing non-domicile tax regime
From April 2025, the current non-domicile tax regime will be abolished. This will affect individuals whose permanent home or domicile is outside the UK for tax purposes (ie have lived in the UK for more than 4 years). The chancellor said that a new residence based scheme will be introduced.
Windfall tax
From November, windfall tax will increase on oil and gas profits to from 35% to 38%.
VAT on private school fees
From January 2025, VAT on private school fees will be introduced.
Free initial meeting
Stephen Charles
Tax Partner, Sheffield
Aaron Hemmington
Tax Partner, Northampton
Related content
Non-Resident Landlord Scheme: The UK Tax Compliance Obligations Overseas Landlords Often Miss
Submit your Tax Return early to avoid the January rush
[email protected] rarely feels urgent until January suddenly arrives. For many, tax returns sit quietly on the to do list while more immediate priorities take over. Running a business, managing staff, travelling for work, family commitments and day to...
Tax Relief on Partners Personal Expenses
[email protected] If you are a partner in a law firm or LLP, you will already be familiar with the difference between drawings and taxable profit. What is often less clear is how expenses paid personally should be dealt with for tax purposes. We regularly...