Today, Chancellor Rachel Reeves delivered the UK Autumn Statement, outlining the first Budget from the new Labour government and introducing some notable updates to the UK tax system.
Below are some of our highlights (not a full list) to keep you informed on the changes that may impact you:
Income Tax & National Insurance
- Income Tax: No changes to income tax or VAT rates or thresholds (but note the private school fees VAT impact below).
- National Insurance: While employee contributions remain unchanged, employer NI will increase by 1.2%, raising the total to 15% from April 2025. In addition, the secondary threshold has been lowered to £5,000 (from £9,100), although for small employers this if offset somewhat by an increase in the Employer NI allowance from £5,000 to £10,500.
Inheritance Tax & Pensions
- The current freeze on the inheritance tax threshold has been extended to 2030, but pensions will now form part of the inheritance tax net (from April 2027) – ending the previous tax-free status.
Fuel Duty
- Fuel duty will remain frozen until the end of next year, with electric vehicle exemptions extended until 2028. Air passenger duty on private jets will increase by 50% to £450 per passenger, while public flights will see a £2 (per passenger) increase.
Capital Gains Tax
- The lower rate of Capital Gains Tax will increase from 10% to 18%, and the higher rate will increase from 20% to 24%.
- The capital gains rate for carried interest will increase from 24% to 32%, and from April 2026, it will fall under the income tax rules.
Corporate Tax
- Corporate tax remains capped at 25% and the small business marginal relief will remain.
State Pension & National Living Wage
- State Pension: The triple lock is reaffirmed, with a 4.1% increase.
- National Living Wage: This will increase by 6.7%, reaching £12.21 per hour.
Business Asset Disposal Relief (BADR)
- The BADR threshold of £1m and rate will remain at 10%, with planned increases to 14% from April 2025 and 18% from April 2026.
Stamp Duty
- Stamp Duty: Rates for second homes will rise from 3% to 5% starting tomorrow (31 October 2024).
Private School VAT & Non-Dom Status
- Private Schools: The VAT exemption and business rates relief for private schools will be removed in 2025 to help fund state education.
- Non-Dom Status: Non-dom status will be abolished in April 2025, and a new residence-based tax scheme introduced.
Business Rates
- Business Rates Relief: 40% relief for Retail, Hospitality and Leisure (RHL) sectors for 2025-26 from 1 April 2025, up to a £110,000 cash cap per business
- Small Business Multiplier: Freeze the small business multiplier for 2025-26
Other
- ISAs: ISA Contribution limits to remain as is
New Policies
More detail will be available in due course, but the government has indicated its intention to:
- Umbrella Companies: Tackle tax non-compliance in umbrella companies by moving PAYE obligations to recruitment agencies or, where an agency is not present, end client businesses from April 2026.
- Unpaid Tax Interest Rate: Increase the interest rate on unpaid tax from April 2025.
- LLP Liquidations: Changes to tax rules on liquidations of Limited Liability Partnerships from 30 October 2024.
- Charity Tax Rules: Strengthen existing charity tax rules from April 2026, to prevent abuse and ensure that only the intended tax relief is given to charities Tax.
- Overseas Pension Transfers: Preventing non-compliance from the transfer overseas of UK tax-relieved pension funds Tax.
- Close Companies – Untaxed Income: Amending anti-avoidance rules to ensure shareholders cannot extract funds untaxed from closed companies from 30 October 2024.
- Payroll Reporting of Benefits: Confirming plans to mandate the reporting of benefits in kind via payroll software from April 2026.
- Car Ownership Schemes: Ending contrived car ownership schemes: closing loopholes in employee car ownership schemes to prevent them from being used to circumvent Company Car Tax from 6 April 2026.
- Tax Practitioner Registration: Modernising and mandating registration of tax practitioners interacting with HMRC from April 2026.
To help you assess how these changes may impact you, we’re offering a FREE 15-minute consultation with one of our advisors. You can book your session using the link below, or feel free to reach out to erin@sailsolutions.co.uk.