Rachel Reeves delivered her first Autumn Budget as Chancellor on Wednesday 30th October.
Snapshot Summary
In this article, we set out the key announcements that Rachel Reeves announced in her Autumn Budget on the 30th of October. There was a major set of announcements in this Budget, the impacts of which both now and in the years to come, will be significant on businesses and taxpayers. So, let’s really distil down the key announcements and pull out the critical points that impact Owner-managed businesses, their owners, and their employees.
Employer's National Insurance increaseFrom 6th April 2025, National Insurance employer contributions will increase by 1.2% from 13.8% to 15%. The threshold to start paying it at is reducing from £9,100 to £5,000 effective from 6th April 2025. The employment allowance is increasing from £5,000 to £10,500, but this appears to now include all businesses, rather than being for anyone with a class 1a NIC annual liability of less than £100k.
Capital Gains Tax increased from 30th October 2024The Chancellor decided to increase the rates of Capital Gains Tax from 10% to 18% on the lower rate, and the higher rate from 20% to 24%. Most importantly, this applies to any disposals made on or after 30th October 2024, so this change has immediate effect. The sale of a commercial property or shares on or before the 29th of October would have been at the old rates of 10%/20% but if the shares didn’t sell until on or after the 30th of October, then the increased rates will apply.
Business Asset Disposal Relief (BADR)Business Asset Disposal Relief (or BADR) has been left at the £1 million lifetime allowance; however, the rate will increase from 10% to 14% from 6th April 2025, and then further to 18% from 6th April 2026. Once the rate has increased, it effectively means that the maximum lifetime saving for BADR will be £60,000, being the 6% difference between the 24% and 18% of your £1m lifetime allowance.
Agricultural Property Relief & Business Property ReliefFrom 6th April 2026, agricultural and business property will continue to benefit from the 100% Inheritance Tax relief up to a limit of £1 million. However, for anything above £1 million, the relief has been reduced to 50%.
Inheritance TaxThe nil rate band and the additional nil rate band ‘residence nil rate band’ will remain frozen until 5th April 2030.
The Government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6th April 2027.
Double-cab pickups will be treated as carsFrom April 2025 the Government will treat double-cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars. For Corporation Tax this will be effective from 1st April 2025, and from the 6th April 2025 for Income Tax, double cab pick-up vehicles will be treated as cars for the purposes of capital allowances benefits in kind and some deductions from business profits.
VAT to apply to private school fees for 1st January 2025It was confirmed that private school fees for education and vocational training will no longer benefit from VAT exemption, and therefore 20% VAT on private school fees will be applicable. This applies to all educational services and vocational training, as well as boarding services provided by private schools. This change applies to terms starting on or after 1st January 2025, and certain prepayments made after 29th July 2024 will also be included.
Increase to minimum wageIncreased rates of the National Living Wage and National Minimum Wage will come into effect from 1st April 2025. The National Living Wage is to rise from £11.44 to £12.21 per hour, and the rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a "single adult rate".
5p cut to fuel duty on petrol and dieselThe previous Chancellor, Jeremy Hunt, announced a 12-month extension to the temporary 5p fuel duty cut for petrol and diesel as part of the Spring Budget in March. Rachel Reeves announced that she will freeze fuel duty next year and will maintain the existing 5p cut for another year.
Employment allowance to increase from £5,000 to £10,500The Employment Allowance currently allows businesses with employer NICs bills of £100,000 or less in the previous tax year to deduct £5,000 from their employer NICs bill. From 6 April 2025, the government will increase the Employment Allowance from £5,000 to £10,500, and remove the £100,000 threshold for eligibility, expanding this to all eligible employers with employer NIC bills.
Summary
In Summary, these are some of the key points to come out of the Autumn Budget and our initial thoughts on the headline announcements. There’s more detail behind these announcements and other points too, which is now available in our statement summary publication which you can download here:
Tax affairs are complicated and we would always advise you to speak with your advisers before making any changes. For more information on how we can help you and your business please contact us at marketing@oldfieldadvisory.com or call 02476673160.
Please note: Some Budget proposals may be subject to amendment in subsequent Finance Act(s). You should contact us before taking any action as a result of the contents of this summary.
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