The UK Autumn Budget – A Summary by Michael Wistow
The budget from a tax perspective raised taxes more than anticipated by most commentators and will now be the highest in living memory as a percentage of GDP, even exceeding the WWII years.
Income tax and VAT rates were left alone but as noted below employer NICs were increased.
Whilst there were many changes, the principal tax changes from a business / entrepreneur perspective are as follows :
- employer NICs rise by 1.2% to 15%. This rate increase sounds modest but will raise about £24bn of the estimated £40bn of tax rises.
- CGT rates are moved up to match the residential property rates of 18 & 24 % for the lower and higher rates, with a 32% rate for “carried interest” till April 2026 (to be replaced with an income tax regime thereafter).
- Business asset disposal relief and investors’ relief to be capped at £1m and the rate payable increasing to 18% from 6 April 2026
- non-doms remittance basis to be removed from 6 April 2025 as previously announced and relief on foreign income and gains for only the first 4 years of UK residence will prove unpopular. Arguably the worst aspect of the new rules for non-doms is subjecting global assets including settlor interested trusts to UK IHT by reference to a residence definition not domicile as previously. The new test is one of residence for 10 out of the last 20 years and also seeks to impose IHT for a period of up to 10 years after residence ceases.
- Pensions will be moved into the scope of IHT for the first time from April 2027. This will be unpopular and will result in double taxation in many cases
- IHT reliefs will be halved, so 20% IHT will be payable on businesses and agricultural property which is passed down. This could well lead to the break up of family businesses and farms or business owners leaving the UK
- Oil & Gas exploration tax rates are increasing to an aggregate 78% and certain investment allowances are scrapped.
- the additional rate of SDLT on second homes is increasing from 3 to 5%.
- VAT on school fees is going ahead as anticipated but may well be subjected to legal challenges
So lots of changes to navigate. Please get in touch with your usual contact or Michael Wistow or Fionnuala Lynch if you would like to discuss.
DATE 31/10/2024
