News

The end of October saw Labour’s first Budget since 2010 and the first from a female Chancellor of the Exchequer.  Many were expecting tax rises and spending cuts to reduce the spending gap in the day-to-day Whitehall budget and to free up funds for investment.

Here are the key announcements:

Increase to employers’ national insurance contributions

With effect from April 2025:

• The rate of employers’ NIC will increase from 13.8% to 15%.
• The secondary threshold, above which employers’ NIC is payable will reduce from £9,100 to £5,000
• Employment allowance (used to reduce employers’ NIC) has increased from £5,000 to £10,000 per annum.

The rise in employment allowance will help shield smaller businesses against the additional costs resulting from the NIC increases.

For more info on Employment Related Tax, click here.

Increase in Minimum Wage

The Government had already announced the increase in the minimum wage as follows:

• National Living Wage (21 and over): £12.21 per hour
• 18-20 Year Old rate: £10.00 per hour
• 16-17 Year Old rate: £7.55 per hour
• Apprentice rate: £7.55 per hour

Capital Gains Tax

The lower rate of capital gains tax increases from 10% to 18% and the higher rate increases to 24% from 20% – both with immediate effect.

Although there are no changes to the lifetime allowance for Business Asset Disposal Relief (BADR) remaining at £1 million.  However, these gains will be taxed at 14% from April 2025 increasing to 18% from April 2026.

Inheritance Tax

The inheritance tax nil rate band (£325,000) and residence nil rate band (£175,000) will remain frozen until 2030 but there are changes to business property relief (BPR) and agricultural property relief (APR).  With effect from 6 April 2025 the first £1 million of a claim for BPR and APR combined will continue to be exempt from IHT but claims more than £1m will be subject to relief of 50% resulting in an effect rate of IHT of 20%.

Income tax allowance

With effect from April 2028 income tax and national insurance thresholds will no longer be frozen but will once again increase by the rate of inflation.

For info on Income Tax, visit our page.

Pensions

From April 2027 pension will no longer be excluded from IHT.  This means any value left in your pension pot on your death will be included in your estate and taxed along with your other assets.

Stamp Duty

An increase in stamp duty comes into force immediately for purchasers of second homes or buy-to-let properties.  This higher rate for additional dwellings has increased to 5%.

Non-Dom Tax Regime

The Government plans to abolish the non-dom tax regime from April 2025.  This applies to UK residents whose permanent home is based outside of the UK for tax purposes.  The plan is to introduce a residence-based scheme including competitive arrangements for those coming to the UK on a temporary basis.   No further details are known at present.

Please contact us if you have any queries or need any further information.