A guide to the Autumn Budget 2024
The Chancellor delivered her long-awaited Budget highlighting reform of tax systems, public spending and tax increases, including Employers’ NIC. As with previous Budgets we will see a number of consultations and further details shared over the next few weeks.
PERSONAL TAX
Income tax
- The basic rate of tax is 20% and for 2025/26, this rate applies to income up to £37,700.
- Higher rate (40%) starts at £50,270 for those eligible for the full personal allowance.
- The additional rate of (45%) starts at £125,140.
These rates will stay the same until April 2028, after which they may increase with inflation.
National Insurance Contributions (NICs)
- The upper limit for NICs (Upper Earnings and Upper Profits Limit) is also £50,270 and will be frozen until April 2028, then adjusted with inflation.
Tax for Scottish and Welsh Residents
- Scotland: Scottish taxpayers pay income tax at different rates on income such as wages and self-employed earnings. These rates currently range from 19% to 48%. New rates for 2025/26 will be announced in December 2024.
- Wales: Welsh taxpayers have the same income tax rates as England and Northern Ireland, but the Welsh Government can vary them. The rates for 2025/26 will be announced in December 2024.
Personal allowance for higher rates from 2023/24
The Income Tax personal allowance is fixed at the current level of £12,570 until April 2028. The government has suggested that, from April 2028, it will then be uprated in line with inflation.
For annual incomes above £100,000, personal allowance is reduced by £1 for every £2 of income above £100,000. At the £125,140 point, the entire personal allowance is lost.
The Marriage Allowance
The marriage allowance lets some couples transfer £1,260 of their personal allowance to their spouse or civil partner, which can save around £250 in tax each year.
Couples who haven’t claim it can still do so for past six years back to 2020/21, potentially saving over £1,000 in total.
Tax on Savings and Dividends
- Savings Allowance: Basic-rate taxpayers get a £1,000 allowance, and higher-rate taxpayers get £500. No allowance is given for additional rate taxpayers.
- Dividend Allowance: The first £500 of dividends is tax-free for all UK taxpayers. dividends above this allowance are taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate).
Pension Tax Limits for 2025/26
- Annual Allowance (AA): £60,000.
- For incomes above £260,000, the allowance reduces by £1 for every £2 of income over this amount, with a minimum allowance of £10,000.
- Lump Sum Allowance: £268,275 tax-free.
- Lump Sum and Death Benefit Allowance: £1,073,100 tax-free in specific situations.
Individual Savings Accounts (ISAs) Limits
- ISA: £20,000
- Junior ISA: £9,000
- Lifetime ISA: £4,000 (excluding government bonus)
- Child Trust Fund: £9,000
High Income Child Benefit Charge (HICBC)
- For incomes over £60,000, a tax charge applies on Child Benefit, increasing by 1% for every £200 of income above the threshold.
- At £80,000, the benefit is fully withdrawn.
Non-UK Domiciled Individuals
- Starting 6 April 2025, the remittance basis for taxing foreign income will be replaced with a residence-based tax system.
- For new arrivals to the UK, foreign income is tax-free on foreign income and gains for new arrivals to the UK in the first four years of tax residence, provided they have not been UK tax resident in any of the ten consecutive years prior to their arrival.
- Non-domiciled and deemed domiciled individuals who don’t qualify for the four-year tax-free period on foreign income and gains will no longer have tax protection on foreign income and gains from trusts they set up themselves.
- For those who have been taxed under the remittance basis:
- Capital Gains Tax (CGT): If you owned foreign assets on 5 April 2017, you can reset their value to that date when you sell them.
- Taxing Foreign Income: Any foreign income or gains earned on or before 5 April 2025 will still be taxed when you bring the money into the UK. This also applies to people who qualify for the new four-year tax-free period for foreign income and gains.
- Temporary Repatriation Facility: Starting in 2025/26, people who used the remittance basis before can bring foreign income and gains earned before the new rules into the UK at lower tax rates—12% for the first two years and 15% in the third year. This facility is only available for three tax years.
- Inheritance Tax: The UK will switch from a domicile-based to a residence-based system for Inheritance Tax, which will expand the types of foreign assets subject to UK Inheritance Tax.
- Overseas Workday Relief: This relief, which allows a tax break on income from overseas work, will now cover up to four years. The maximum relief allowed will be the lower of £300,000 or 30% of your total employment income.
EMPLOYMENT
National Insurance Contributions (NICs)
For Employees
- From 6 April 2024, employees will pay 8% on their NICs, while employers will pay 13.8%.
- From 6 April 2025, the employer rate will increase to 15%.
- Secondary Threshold (the point at which employers start paying NICs on each employee’s earnings) is currently £9,100 per year. This will drop to £5,000 per year from 6 April 2025 until 2028, after which it will rise with inflation.
- Employment Allowance (a deduction for smaller businesses) is currently £5,000. This will increase to £10,500 from April 2025, and the rule limiting eligibility to those with NIC bills of £100,000 or less will be removed. All eligible employers can then claim it.
For the Self-Employed
- From 6 April 2024, Class 4 NICs rates will stay at 6% and 2%.
- For Class 2 NICs, from 6 April 2024 – self-employed people with profits of £6,725 or above will qualify for contributory benefits, including the State Pension and other benefits through a National Insurance credit without paying Class 2 NICs.
- Those with profits under £6,725 can still voluntarily pay Class 2 NICs to get access to contributory benefits, including the State Pension.
Other Changes
- In 2025/26, Lower Earnings Limit (LEL) will increase to £6,500 per year and the Small Profits Threshold (SPT) to £6,845. Class 2 NICs will be £3.50 per week, and Class 3 NICs will be £17.75 per week.
Other NIC-Related Changes
- The NICs relief for hiring veterans will be extended until 5 April 2026. Employers won’t have to pay NICs up to £50,270 in a veteran’s first year of civilian work.
National Living Wage and National Minimum Wage
- From 1 April 2025:
- National Living Wage: £12.21
- Ages 18-20: £10.00
- Ages 16-17 and Apprentices: £7.55
- These changes mean a full-time worker on National Living Wage (37.5 hours/week) will see an annual pay increase of £1,505.54 and their monthly gross pay by £125.46.
Taxable Benefits for Company Cars and Vans
- For 2025/26:
- Zero-emission cars tax rate rises from 2% to 3%.
- Tax for other cars increases by 1%, with a maximum benefit of 37%.
- Van Benefit Charges and Van Fuel Benefit Charges will be adjusted for inflation from 6 April 2025.
Tax treatment of double cab pick-up vehicles
Following a Court of Appeal decision, the government will not introduce legislation to maintain the treatment of double cab pick-up vehicles with a payload of one tonne or more as goods vehicles.
- Double Cab Pick-Up Vehicles (DCPUs) with a payload of 1 tonne or more will be treated as cars for tax purposes from April 2025.
- From 1 April 2025 for Corporation Tax, and 6 April 2025 for Income Tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind and some deductions from business profits.
- Transitional rules will apply for DCPUs purchased before this date.
Annual uprating of the van benefit charge and the car and van fuel benefit charges for tax year 2025 to 2026
The increases to the van benefit charge and the car and van fuel benefit charges will using the September 2024 Consumer Prices Index (CPI).
The following new rates will come into effect from 6 April 2025:
- the van benefit charge will be £4,020 in tax year 2025 to 2026
- the van fuel benefit charge will be £769 in tax year 2025 to 2026
- the car fuel benefit charge multiplier will be £28,200 in tax year 2025 to 2026.
Taxation of company cars — the appropriate percentage for tax years 2028 to 2029 and 2029 to 2030
The government is setting company car tax rates for tax years 2028 to 2029 and 2029 to 2030:
- Appropriate percentages for zero emission and electric vehicles will increase by 2 percentage points per year in 2028 to 2029 and 2029 to 2030, rising to an appropriate percentage of 9% in tax year 2029 to 2030.
- Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in tax year 2028 to 2029 and 19% in tax year 2029 to 2030.
- Appropriate percentages for all other vehicle bands will increase by 1 percentage point per year in tax years 2028 to 2029 and 2029 to 2030. This will be to a maximum appropriate percentage of 38% for tax year 2028 to 2029 and 39% for tax year 2029 to 2030.
Reporting Benefits in Kind
- Starting April 2026, employers must use payroll software to report and pay tax on benefits in kind for income tax and NICs.
Tackling Tax Non-Compliance
- Umbrella Companies: From April 2026, recruitment agencies will be responsible for ensuring PAYE tax is paid on workers hired through umbrella companies. If no agency is involved, the client company will be responsible. This aims to protect workers from unexpected tax bills.
- Car Ownership Schemes: From April 2026, rules will close loopholes in car ownership schemes that let employees avoid company car tax.
Taxation of Employee Ownership Trusts and Employee Benefits Trusts
- A package of reforms to the taxation of Employee Ownership Trusts and Employee Benefit Trusts will be legislated. From 30 October 2024, these reforms will ensure that Employee Ownership Trusts and Employee Benefit Trusts focus on employee benefits and ownership, preventing misuse.
Statutory Neonatal Care Pay
- The government will clarify the income tax treatment of Statutory Neonatal Care Pay. This will ensure that the payment is subject to income tax, aligning it with other parental pay schemes (for example statutory maternity and paternity pay schemes)
BUSINESSES
Corporation tax
The corporate tax roadmap confirms the major features of the Corporation Tax regime for the duration of this Parliament including:
- No Change in Rates: From April 2025, Corporation Tax stays at 25% for companies with profits over £250,000.
- Small Profits Rate: Companies earning £50,000 or less will pay a lower rate of 19%.
- Marginal Relief: Companies with profits between £50,001 and £250,000 will have a gradual tax increase, receiving some relief to ease into the main rate.
Capital Allowances
- Full Expensing for New Equipment: Companies can write off 100% on most plant & equipment (except cars), so long as it’s new and unused. Some assets, like long-life items, have a 50% allowance.
- ‘Full expensing’ deduction for leased assets: The Chancellor announced an intention to include full expensing tax relief on leased assets. The relief will enable businesses to be more efficient by leasing assets to nurture productivity by getting the newest, cleanest and most efficient plant and machinery into the hands of business owners. No timeline for the start of the relief has been announced and the relief is subject to draft legislation to be published.
- Investment Limits: The Annual Investment Allowance will continue to offer 100% first-year relief for plant and machinery investments up to £1m for all businesses, including unincorporated ones. Writing down allowances will remain flexible, allowing businesses to choose which allowances to claim for main and special rate machinery. Additionally, the Structures and Buildings Allowance will provide relief for capital expenditure on the purchase, construction, and renovation of new non-residential structures and buildings.
- Extensions on Green Investments: Full allowances (100%) for qualifying expenditure on zero-emission vehicles and 100% First Year Allowance for electric vehicles charge points have been extended until 31st March 2026 for corporation tax purposes and 5 April 2026 for income tax purposes.
Furnished Holiday Lettings (FHL)
The government will abolish the FHL tax regime, eliminating the tax advantage for landlords who let out short-term furnished holiday properties over those who let out residential properties to longer-term tenants. This will take effect from April 2025.
At present, landlords who use the furnished holiday lets regime can deduct the full cost of their mortgage interest payments from their rental income, are entitled to capital allowances on the furniture, pay lower capital gains tax (CGT) when they sell and are entitled to CGT rollover relief etc.
- Abolition of FHL Rules: From April 2025, FHL properties will be treated like regular property businesses for tax purposes. This will apply to individuals, companies and trusts who operate or sell FHL accommodation.
- Impacts:
- Pensions: FHL income won’t count when calculating maximum pension relief.
- Loans: Tax relief on dwelling-related loans is restricted to the basic rate of 20%.
- Capital Gains: Special reliefs for FHL will end on disposals made on or after 6 April 2025 (1 April 2025 for Corporation Tax); replacement asset roll-over relief won’t apply after these dates.
- Losses: Any unused losses, can be carried forward to set against future years’ profits
Multinational Tax
- Undertaxed Profits Rule: The government will introduce this new Rule as part of a global tax agreement by over 135 countries. This will take effect on or after 31 December 2024, affecting large companies.
- Abolishment of Offshore Intangible Property Tax Rules: These will end for income from 31 December 2024.
Energy Profits Levy (EPL)
- Increased Levy: The levy on oil and gas profits will increase from 35% to 38%, the end date of the levy will be extended to 31 March 2030.
- The EPL’s Investment Allowance will be removed with a reduced Decarbonisation Investment Allowance (reduced to 66%). These measures will take effect from 1 November 2024.
Business Rates
- Relief for Retail, Hospitality, and Leisure: Eligible businesses get 40% relief on business rates for 2025/26, this is capped at £110,000 per business.
- Frozen Small Business Multiplier: Remains at 49.9p, while the standard multiplier increases to 55.5p.
Creative Industries
- Enhanced Tax Credits for Productions: From 1 April 2025, higher tax credits (39% on UK visual effects (VFX) costs) for film, TV, and theatre productions, especially for independent UK films. VFX costs will be exempt from the AVEC’s 80% cap o qualifying expenditure – costs incurred from 1 January 2025 will be eligible.
- Independent Film Tax Credit: UK films with budget under £15m and a UK lead writer or director will be able to claim an enhanced 53% rate of AVEC from 1 April 2025.
- From 1 April 2025, the rates of Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief will be set at 40% for non-touring productions and 45% for touring productions and all orchestra productions – this is applicable UK wide.
Other Changes
- Close Company Loans: New rules to prevent shareholders extracting funds from closed companies, taking untaxed loans from their companies.
- Charity Tax Rules: Updates to ensure only the intended tax relief is given to charities, effective April 2026.
CAPITAL GAINS TAX
Capital Gains Tax (CGT) Rates
- Increased Rates for disposal other than of residential property: Effective 30 October 2024, the main rates of Capital Gains Tax and carried interest will increase:
- Basic rate increases from 10% to 18%.
- Higher rate increases from 20% to 24%.
- Residential Property: the existing rates for residential property (18% and 24%) will remain unchanged.
- Trustees and Representatives: CGT rate for trustees and personal representatives will rise from 20% to 24% from 30 October 2024.
Capital Gains Tax Annual Exemption
- Exempt Amount: The annual exempt amount remains at £3,000 for 2025/26.
Business Asset Disposal Relief & Investors’ Relief
- Rate Increases: For individuals claiming these reliefs:
- Rate increases from 10% to 14% for disposals made on or after 6 April 2025.
- Rate further increases to 18% for disposals made on or after 6 April 2026.
- Reduced Lifetime Limit for Investors’ Relief: The lifetime limit reduces from £10 million to £1 million for qualifying disposals made on or after 30 October 2024.
- Private equity managers will have to pay 32% tax on their carried interest gains from April 2025.
Carried Interest Rates and Reform
- New Rate: The rates that apply to carried interest of 18% and 28% will increase to a flat 32% for carried interest received by individuals on or after 6 April 2025.
- Income Tax Framework: From April 2026, all carried interest will be taxed under income tax rules, with a 72.5% multiplier on qualifying interest brought within the charge.
LLP (Limited Liability Partnership) Asset Contributions
- Tax on Liquidated Assets: Gains on assets contributed by LLP members will be taxed when the LLP is liquidated, and the assets are transferred to the member or a connected person. This will have effect on liquidations that commence on or after 30 October 2024.
Overseas Pension Transfers
- Transfer Charge: A 25% charge applies to UK pension funds transferred to overseas schemes (QROPS).
- EEA and Gibraltar Exclusion Removal: From 30 October 2024, transfers to QROPS in the EEA and Gibraltar will no longer be excluded from this charge.
Inheritance Tax (IHT) Updates
IHT thresholds have been frozen until 2030. In addition, significant restrictions on agricultural and business property relief are proposed from April 2026. Unused pension funds and death benefits will be included in estates from April 2027.
- Nil Rate Bands Frozen: Both the main nil rate band (£325,000) and residence nil rate band (£175,000) are frozen until 5 April 2030.
- Pension and Death Benefits in Estate: From 6 April 2027, the government will bring unused pension funds and death benefits payable from a pension into a pension’s estate, so it’s included in inheritance tax calculations.
Agricultural and Business Property Relief
- Inheritance Tax Relief Limit: From 6 April 2026, 100% IHT relief up to a limit of £1 million for agricultural and business properties. Property in excess of the limit will benefit from a 50% relief.
Extension of Agricultural Property Relief to Environmental Land
- Expanded Scope: From 6 April 2025, Agricultural Property Relief extends to land under environmental agreements with the UK government, devolved governments, or approved bodies.
OTHER MATTERS
Making Tax Digital (MTD) For Income Tax Self-Assessment
Making Tax Digital (MTD) for Income Tax Self-Assessment will be extended to sole traders and landlords with income over £20,000 by the end of this Parliament.
This expands the rollout of MTD for Income Tax Self-Assessment, which is April 2026 for sole traders and landlords with income over £50,000 and April 2027 for those with income over £30,000.
VAT Thresholds
From 1 April 2024 the taxable turnover threshold which determines whether a person must be registered for VAT were increased from £85,000 to £90,000. The taxable turnover threshold which determines whether a person may apply for deregistration were increased from £83,000 to £88,000. No further changes were announced.
Removal of VAT Exemption for Private School Fees
Private school fees for education and vocational training will no longer benefit from VAT exemption and will be subject to VAT at the standard rate (20%).
The change will apply to terms beginning on or after 1 January 2025 although certain prepayments made after 29 July 2024 will also be included.
Stamp Duty Land Tax (SDLT)
Individuals buying additional properties, like second homes or buy-to-let properties in England and Northern Ireland, will generally pay Stamp Duty Land Tax (SDLT) at a rate that is 3% above the standard rate.
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%.
Similarly, there are changes for companies and other non-individual buyers purchasing residential properties in England and Northern Ireland.
For companies and non-individual buyers purchasing residential properties valued over £500,000, the SDLT rate will increase from 15% to 17%, effective from 31 October 2024.
OTHER
Additional resources for HMRC
The government is continuing to tackle tax non-compliance by making further investments, including in HMRC’s capacity to collect tax debts. The government is building on strong actions at recent fiscal events, including measures to clamp down on promoters of tax avoidance, and is now going further to strengthen taxpayer protections, making it harder for bad actors to provide tax advice that could cause harm. The government is consulting both on options to strengthen the regulatory framework in the tax advice market, and on requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf.
The government has also indicated it is investing in improving HMRC’s customer services, providing the resource needed to meet performance targets, including answering 85% of phone calls where the taxpayer wants to speak to an adviser. The government will transform HMRC into a digital-first organisation, with a Digital Transformation Roadmap to be published in spring 2025.
Key measures announced by the Chancellor in the Autumn Budget 2024 are summarised within this Guide.
KEY TAX RATES
Income tax rates: England, Wales & Northern Ireland |
2025/26 |
2024/25 |
0% starting rate for savings only |
Up to £5,000 |
Up to £5,000 |
0% on personal allowance (subject to any clawback of PA) |
£0 – £12,570 |
£0 – £12,570 |
20% basic rate tax |
£12,571 – £50,270 |
£12,571 – £50,270 |
40% higher rate tax |
£50,271 – £125,140 |
£50,271 – £125,140 |
45% additional rate tax |
Above £125,140 |
Above £125,140 |
Scottish rates of income tax (non-dividend income) (note 2) |
||
0% on personal allowance (subject to any clawback of PA) |
£0 – £12,570 |
£0 – £12,570 |
19% starting rate |
£12,571 – £14,876 |
£12,571 – £14,876 |
20% basic rate tax |
£14,877 – £26,561 |
£14,877 – £26,561 |
21% intermediate rate tax |
£26,562 – £43,662 |
£26,562 – £43,662 |
42% higher rate tax |
£43,663 – £75,000 |
£43,663 – £75,000 |
45% advanced rate |
£75,001 – £125,140 |
£75,001 – £125,140 |
48% top rate (47% for 2023-24) |
Above £125,140 |
Above £125,140 |
Income tax rates (dividend income) |
||
Dividend ordinary rate (for dividends within basic rate band) |
8.75% |
8.75% |
Dividend upper rate (for dividends within higher rate band) |
33.75% |
33.75% |
Dividend additional rate (for dividends above higher rate band) |
39.35% |
39.35% |
Personal Allowances |
||
Personal allowance |
£12,570 |
£12,570 |
Dividend allowance (no allowance for trustees) |
£500 |
£500 |
Maximum married couple’s allowance for those born before 6 April 1935 (note 5) |
£11,270 |
£11,080 |
Married couple’s allowance – minimum amount |
£4,360 |
£4,280 |
Micro entrepreneur’s allowance (property or trading income) |
£1,000 |
£1,000 |
Income limit for personal allowance (note 6) |
£100,000 |
£100,000 |
Income limit for married couple’s allowance: born before 6 April 1935 |
£37,700 |
£37,000 |
Blind person’s allowance |
£3,130 |
£3,070 |
Rent-a-room relief |
£7,500 |
£7,500 |
Transferable/shareable tax allowance for married couples and civil partners (note 7) |
£1,260 |
£1,260 |
Personal savings allowance for basic rate taxpayers |
£1,000 |
£1,000 |
Personal savings allowance for higher rate taxpayers |
£500 |
£500 |
Personal savings allowance for additional rate taxpayers |
£0 |
£0 |
National insurance |
2025/26 |
2024/25 |
Lower earnings limit, primary class 1 (per week) |
£125 |
£123 |
Upper earnings limit, primary class 1 (per week) |
£967 |
£967 |
Apprentice upper secondary threshold (AUST) for under 21s/25s |
£967 |
£967 |
Primary threshold (per week) |
£242 |
£242 |
Secondary threshold (per week) |
£96 |
£175 |
Employment allowance (per year/employer) |
£10,500 |
£5,000 |
Employee’s primary class 1 rate between primary threshold and upper earnings limit |
8% |
8% |
Employee’s primary class 1 rate above upper earnings limit |
2% |
2% |
Married woman’s reduced rate between primary threshold and upper earnings limit |
1.85% |
1.85% |
Married woman’s rate above upper earnings limit |
2% |
2% |
Employer’s secondary class 1 rate above secondary threshold |
15% |
13.8% |
Class 2 small profits threshold (per year) |
£6,845 |
£6,725 |
Class 2 lower profits threshold (per year) |
£12,570 |
£12,570 |
Class 2 (where profits are below small profit threshold (voluntary per week)) |
£3.50 |
£3.45 |
Class 2 rate (per week where profits are above small profits threshold) |
£0 |
£0 |
Class 3 voluntary rate (per week) |
£17.75 |
£17.45 |
Class 4 lower profits limit |
£12,570 |
£12,570 |
Class 4 upper profits limit |
£50,270 |
£50,270 |
Class 4 rate between lower profits limit and upper profits limit |
6% |
6% |
Class 4 rate above upper profits limit |
2% |
2% |
Class 1A/1B NIC |
15% |
13.8% |
This is a basic guide prepared by Core Connect Accountants for their clients. It should not be used as a definitive guide since individual circumstances may vary. Specific advice should be obtained, where necessary.
By Cindy Tan @ Core Connect Accountants