Change is on the horizon. 2024 has already brought about a considerable number of considerations for both businesses and individuals, and the Autumn Budget has certainly extended that list. But now that we’ve all had the opportunity to interpret the details of the Budget so far, we want to help you understand how it impacts your situation.
With a number of changes introduced, representing both new challenges and new opportunities for businesses and individuals alike, it’s crucial to gain a deeper understanding in order to more effectively plan your next steps.
If you need support or advice with any of the points outlined below, we’re here to help. Our teams work collaboratively to find the best outcomes for the businesses and individuals we work with – they always have. And it’s that collaborative approach that brings together real expertise that we use to deliver strategies tailored to your specific needs. By combining deep insights into business operations with a robust understanding of personal wealth planning, we can support and prepare you to navigate the complexities of the Budget with confidence.
Business taxation changes
1. The National Living Wage (NLW) to increase from 6 April 2025
For those aged over 21, a 6.7% increase representing a new hourly rate of £12.21 will be introduced. Similarly, those aged 18-20 will receive a 16.3% increase rising to an hourly rate of £10, and those aged under 18, and Apprentices, will see an 18% increase with a new hourly rate of £7.55.
2. National Insurance Contributions (NICs) to increase from 6 April 2025
The Employer NIC rate will see a rise from 13.8%, to 15%, whilst simultaneously the secondary threshold (the level at which employers start paying NICs for each employee) will reduce from £9,100, to £5,000.
3. Other important business tax changes
Capital Gains Tax (CGT) will see new unified rates at 18% (basic) and 24% (higher) for both residential and non-residential property, as of 30 October 2024.
Business Asset Disposal Relief will be retained at the £1million limit and the 10% CGT rate will also be retained where available, but rates will rise to 14% from 6 April 2025, and then 18% from 6 April 2026.
A higher rate of Stamp Duty Land Tax is to be paid on additional dwellings, with an increase from 3% to 5% as of 31 October 2024.
The overall impact: Businesses will experience significant financial pressures with the changes outlined in the Budget, particularly those that operate in sectors with high employment costs and asset-intensive operations, such as retail, hospitality, and manufacturing. These challenges represent a need for careful navigation, highlighting the importance of a proactive approach to cost management, assessing pricing strategies, workforce structures, and the consideration of long-term investments in workforce efficiency and technology. One of the most important elements that businesses need to take away from this is the crucial need for early planning - it’s essential in order to mitigate these financial impacts and to maintain resilience in a changing economic landscape.
Personal taxation changes
1. Inheritance tax changes
The individual inheritance tax (IHT) allowances (£325,000 plus a £175,000 top-up) will remain frozen until 2030, extending the previous freeze end date from 2028. Plus, from 6 April 2025, the interest on unpaid IHT will rise from 7.5%, to 9%.
2. Pension tax changes
A huge change to pension taxation is incoming, with inherited pensions being subject to IHT as of 6 April 2027. Almost all pension death benefits that pass on death will be included within the value of a person’s estate for Inheritance tax purposes. The pension scheme administrators will need to work alongside the estate personal representatives to calculate the IHT due and pay from the pension pot.
3. Business and agricultural relief from 6 April 2026
From 6 April 2026, qualifying businesses and farmers will only get 100% relief against IHT on the first £1million of business or agricultural assets. Any assets that are valued at more than £1million will be due at 50% of the standard rate, i.e. a 20% rate of IHT. This new £1million allowance will not transferable between spouses.
This £1million allowance will cover the estate passing on death, gifts to children where the donor fails to survive 7 years, and lifetime gifts into trust. The government intends to publish a technical consultation in early 2025 on the detailed application of the policy to charges on property within trust.
It’s also important to note that shares on the AIM market which previously could attract 100% relief from IHT, will now only ever attract 50% relief from IHT.
The overall impact: A increased tax burden on individuals and families will create challenges for many, particularly those with larger estates or family-owned businesses. This highlights the need for proactive estate planning to help those affected to manage higher costs, plan succession, minimise tax liabilities, and secure wealth for future generations. It’s important to review Wills, explore lifetime gifting, and consider transferring shares and business assets insurance options as strategies to safeguard your assets.
How can we support you?
The raft of changes introduced in the Budget are likely to affect a significant number of businesses and individuals, giving rise to a number of challenges across the board, as well as those that will occur on a case-by-case basis. In order to mitigate the risks that you or your business may be facing, it’s important to start having conversations early so that you can prepare and plan most effectively.
We can help you to assess how the changes affect your business and personal circumstances, whilst supporting you in the process of developing strategies to manage increased costs and tax implications. We can also help you to ensure that your succession and estate plans remain aligned with your goals.