The Budget 2024 has arrived. It has been highly anticipated by many, including the general public, as to what measures the new Labour government would introduce. This is the first budget to be produced by a Labour government in over 13 years. And it certainly has generated a lot of talk amongst businesses, farmers, and those that are set to be affected by the tax changes.
This budget, was one which has been drip fed out, in order to ensure that the market was not spooked by the changes. Nearly 3 or 4 months before, information was already coming out from government about what was to be expected.
What do we now know?
There were a number of major increases in tax from the government in The Budget 2024 with the biggest one hitting employers. The government will increase the rate of employer NICs from 13.8% to 15% from 6 April 2025. The Threshold at which point employers begin to pay is currently £9,100 a year, which will now reduce to £5,000 a year from 6 April 2025 until 6 April 2028. What remains to be seen is how this will work for businesses, with some of these costs potentially passed on to employees (through price increases, less job opportunities or less salary increases).
Alongside this, the government also announced that the National Living Wage would increase to £12.21 for those aged 21 and over, and increase to £10.00 an hour for those aged 18 to 20. This will also mean that employers will begin to pay employers national insurance at a much quicker rate.
Stamp Duty Land Tax increase
One of the other increases (which was announced and quite quickly moved past) was an increase in Stamp Duty Land Tax for additional dwellings. From 31 October 2024 the Higher Rates for Additional Dwellings (HRAD) surcharge on Stamp Duty Land Tax (SDLT) will be increased by 2 percentage points from 3% to 5%. The single rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 by corporate bodies will also be increased by 2 percentage points from 15% to 17%.
What does this mean? Well effectively anyone purchasing a second home, or investment property, will now (as of this article being published), pay more SDLT than before. There will also be changes to the overall SDLT rates in April which will cover further at another time. The reason for the SDLT increase is to fend off investors, and open up more housing for First Time Buyers, to give them a chance to purchase properties.
Capital Gains Tax & Business Asset Disposal Relief
In The Budget 2024, there were also changes made to Capital Gains Tax and Business Asset Disposal Relief.
Capital Gains Tax Rates – The lower and higher main rates of Capital Gains Tax will increase from 10% to 18% and from 20% to 24% respectively for disposals made on or after 30 October 2024. The rate for Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14% from 6 April 2025, and will increase again to match the lower main rate at 18% from 6 April 2026.
The rate for residential property remains at 18% & 24%.
Inheritance Tax & Agricultural Relief
One of the main talking points from The Budget 2024 was how Inheritance Tax would change. We now know more details following the announcement of The Budget. The biggest change was that from 6 April 2027 unused pension funds and death benefits will now be included in the estate of an individual and will be liable for tax.
The government will also reform agricultural reliefs from 6 April 2026. In addition to existing nil-rate bands and exemptions, the current 100% rates of relief will continue for the first £1 million of combined agricultural and business property to help protect family businesses and farms. The rate of relief will be 50% thereafter.
IHT thresholds, including the nil-rate band and the residence nil-rate band, have been frozen at their current levels until April 2030. This means the nil-rate band will remain at £325,000, and the residence nil-rate band will stay at £175,000 for an additional two years.
Others
Within The Budget 2024, there is a lot to unpack. The budget covers all from Tobacco products, fuel duty to benefits payments, reforms for HMRC to social housing and much more. We feel the above covers some of the main points but if you wish to read The Budget 2024 in full, you can read it here.
Conclusion
Before The Budget 2024 was announced, we knew that there were set to be major changes as the government tried to fill a stated "£22 billion black hole" in public finances. It seems to be that the government are believing that major businesses will foot most of the tax rises, with many small-medium enterprises set to also suffer.
With increases to SDLT, Capital Gains Tax and Inheritance Tax, it certainly feels that planning ahead and future planning is more important than before.
As mentioned, this blog post has been generated on November 1st 2024 and is our current understanding of The Budget measures. Over due course, some of these measures may change or more details may arrive as time progresses.
If you are concerned about some of the measures announced in The Budget 2024, get in touch today and speak to one of our trusted solicitors.
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