The Chancellor of the Exchequer, Rachel Reeves, delivered her first Budget on Wednesday 30 October, with plans aimed at “repairing the public finances” while protecting working people.
Plans to increase National Insurance Contributions for employers and increase rates of Capital Gains Tax were widely rumoured in advance, but the Chancellor repeatedly emphasised how she was keeping all of the Labour Government’s election manifesto promises. Key tax-related announcements included the following:
Personal taxes
- No increases to the headline rates of Income Tax or National Insurance Contributions (NICs) for employees.
- Employer’s NICs will increase by 1.2%, to 15%, from April 2025, and the “secondary threshold” above which employers start to pay NICs will reduce from £9,100 to £5,000. An increase in the employment allowance from £5,000 to £10,500 will help to offset this for smaller employers.
- There will be no extension to the current freeze of personal tax thresholds, so that Income Tax thresholds will again increase with inflation from tax year 2028/29.
- The remittance basis of taxation available to individuals resident but not domiciled in the UK will be abolished from 6 April 2025. The “outdated concept” of domicile will be removed from the tax system.
- Temporary Repatriation Relief, allowing wealthy foreigners to bring capital and gains to the UK at a reduced rate of tax, will be extended to three years, with increased scope.
Capital Gains Tax (CGT) and Inheritance Tax (IHT)
- CGT rates will increase immediately (i.e., gains on or after 30 October 2024), with the lower rate increasing from 10% to 18% and the higher rate from 20% to 24%.
- The lifetime limit of £1 million will remain for Business Asset Disposal Relief. The reduced rate available for qualifying disposals will increase to 14% for disposals from 6 April 2025, then to 18% from 6 April 2026.
- CGT on carried interest increases to 32% from April 2025 with measures to make this simpler and fairer
- The Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes will be extended by ten years to 5 April 2035, as planned.
- IHT thresholds are frozen until 2030.
- Inherited pensions will be brought into the scope of IHT from April 2027.
- Currently uncapped, from April 2026, the first £1m of combined qualifying assets will obtain 100% relief under Agricultural Relief and Business Relief. For assets over £1m, the relief will be 50%, giving an effective rate of 20%. For AIM shares, the relief will be 50%, giving an effective rate of 20%. Transitional provisions will apply the capped reliefs to gifts made from today’s date, if the transferor dies after 6 April 2026.
Business taxes
- A commitment to the previously announced business tax roadmap. Corporation tax rates will be capped at 25% through to the end of the parliamentary term.
- The “full expensing” capital allowances regime will remain in place, alongside the £1 million annual investment allowance.
- No further changes to R&D tax reliefs beyond the newly-merged scheme that combined SME and large company reliefs.
- Two permanently lower business rates for retail, hospitality and leisure properties, providing 40% relief up to a cap of £110,000 per business.
- The energy profits levy on oil and gas companies will increase to 38% from 1 November 2024, removing the 29% investment allowance, and extending the levy until 31 March 2030.
Indirect taxes and duties
- As previously announced, private school fees will be subject to VAT from the start of 2025. Charitable business rates relief available to private schools will be removed from April 2025.
- Despite expectations of an increase, fuel duty will again be frozen and the current temporary 5p cut will be extended.
- Tobacco duties escalator renewed at RPI +2%, increased duty by 10% on hand-rolled tobacco this year, flat-rate duty on all vaping liquid from 2026, one-off increase in tobacco duty to maintain the incentive for smokers to give up smoking
- Air passenger duty will be increased by a further 50%.
- Alcohol duty rates on non-draft products will increase in line with RPI from February.
- The Stamp Duty Land Tax surcharge for second homes will increase by 2%, from 3% to 5%.
We will publish a detailed briefing document shortly covering these and other measures in more detail. We also look forward to welcoming many of you to our Budget breakfast event next week, on Tuesday 5 November at The Racquet Club Hotel.
liverpool accounting firms
accountants liverpool city centre
accountancy liverpool