30 October 2024

Autumn Budget 2024

As in the past I do not comment on many items covered by the national media. At the time of writing there are 9 pages of press releases (many of which superfluous for most of us!)

CGT was the main concern and yes the rates are increasing but at least they have not been charged at income tax rates! All assets will be charged at the same Rates as Residential Property with immediate effect - details below (TBH I did not expect this to be straight away).

Business Asset Disposal Relief (the 10% rate) remains unchanged for this tax year and increases with effect from April 2025 so time to do some planning if a couple have £2 million of business asset gains but not ready to dispose of the business yet.

CGT rates

• the main rates of Capital Gains Tax that apply to assets other than residential property and carried interest from 10% and 20% to 18% and 24% respectively, for disposals made on or after 30 October 2024
• the rate of Capital Gains Tax that applies to trustees and personal representatives from 20% to 24% for disposals made on or after 30 October 2024
• the rate of Capital Gains Tax that applies to Business Asset Disposal Relief and Investors'' Relief from 10% to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026.

The rates of Capital Gains Tax that apply to residential property disposals (18% and 24%) will remain unchanged.

IHT is not good news:-

Pension funds previously not charged to IHT now will be with effect from April 2026. (Historically thinking was to not draw pension fund if not required, perhaps a consideration now is to draw the tax free lump sum and gift) However this is under consultation until January 2025 so no detail known.

Business Assets in excess of £1 million now charged at 20% in excess of £1 million value (per person)

As always there is devil in the detail. The new rates apply if a person gifts between now and April 2026 but dies within seven years of the gift.

The nil rate band of IHT remains unchanged at £325k and the residential rate at £175k. (pretty much forever it seems)

Employment tax - Employers NI increasing by 1.2% to 15% and is now calculated on salaries in excess of £5,000. The potentially significant increase however offset for smaller companies (those employing up to four people apparently) by the Employment Allowance increasing from £5,000 to £10,500 Employment Allowance is a deduction from the payment made to HMRC for NI (I had wondered if this may be reduced!)

SDLT not good news for second homes in particular relevant when transferring residential property to a limited company. The rate increasing from 3% to 5% wef 31st October.

Directors Loans from Close Companies. The rules are being tightened and at present watch this space for the many who borrow from their companies - at first sight it may not be too onerous but...

Electric cars continue to be tax favoured.

Tax advisors - with effect from April 2026 all tax advisors have to be registered with HMRC. While I do not welcome compliance this may have merit!

Umbrella Companies - an agency that supplies the worker to the end client will be legally responsible for operating PAYE on the worker's pay and will be liable for any shortfall. Bear in mind they are very much impacted by the Employer NI increase.