Autumn 2024 Budget Summary
In one of the longest ‘Budget’ speeches in memory, Chancellor Rachel Reeves gave the first Labour Budget speech for nearly 15 years on 30 October 2024. A summary of the key elements is set out below.
Non- domicile changes
The non-domicile tax regime is to be abolished from 6 April 2025. Domicile will no longer be a feature of
the UK tax system and will be replaced by a system based on residency.
Capital gains tax (CGT) rates changes
The main rates of CGT will increase from 10% (Basic Rate Taxpayer) and 20% (Higher Rate Taxpayer) to
18% and 24% respectively for disposals made on or after 30 October 2024.
The main rate of CGT that applies to trustees and personal representatives will increase from 20% to 24% for disposals made on or after 30 October 2024.
The rate of CGT that applies to Business Asset Disposal Relief and Investors’ Relief is increasing 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.
Inheritance Tax (IHT) changes
Freezing of IHT thresholds
The IHT thresholds were already fixed at their current levels until April 2028. This time period has been
extended to April 2030. This measure will fix the:
- Nil-rate band at £325,000
- Residence nil-rate band at £175,000
- Residence nil-rate band taper, starting at £2 million
Inherited pensions
From 6 April 2027, most unused pension funds and death benefits will be included in the value of a
person’s estate for Inheritance Tax purposes.
The change will apply to both Defined Contribution and Defined Benefit schemes. It will apply equally to
UK registered schemes and Qualified Non-UK Pension Schemes (QNUPS). This will ensure that most
pension benefits are treated consistently for IHT purposes, regardless of whether the scheme is
discretionary or non-discretionary, Defined Contributions or Defined Benefit schemes.
A technical consultation has been issued on the processes required to implement these changes for UK-
registered pension schemes. After the consultation, the government will publish a response document and carry out a technical consultation on draft legislation for these changes in 2025.
The income tax treatment of pension death benefits before and after age 75 appears to be unchanged and payable in addition to any IHT .
The government will continue to incentivise pension savings for their intended purpose of funding
retirement, supported by ongoing tax reliefs on both contributions into pensions and on the growth of funds held within a pension scheme.
Agricultural Relief (AR) and Business Relief (BR)
From 6 April 2026, AR and BR will be reformed, as summarised below:
- The 100% rate of relief will continue for the first £1 million of combined agricultural and business
property to help protect family farms and businesses, and it will be 50% thereafter. - The rate of business relief will reduce from 100% to 50% in all circumstances for shares
designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative
Investment Market.
National Insurance (NI)
Employer NI is to increase to 15% (from 13.8%) from April 2025 and the secondary threshold will reduce
to £5,000 (from the current £9,100), i.e. employer NI will become payable on an employee’s earnings
above £5,000 p.a.
The Employment Allowance, a National Insurance exemption for smaller businesses, will increase to
£10,500 (from £5,000).
Stamp Duty Land Tax (SDLT)
The higher rates of SDLT for purchases of additional dwellings (second properties) and for purchases by
companies is increasing from 3% to 5% above the standard residential rates of SDLT.
This measure also increases the single rate of SDLT payable by companies and other non-natural persons purchasing dwellings over £500,000, from 15% to 17%.
Both changes apply to transactions with an effective date on or after 31 October 2024.