The UK’s Autumn Budget 2024 of October this year presented by Chancellor Rachel Reeves, outlined significant measures with a focus on tax increases, public services funding, and social welfare improvements.
Highlights
National Insurance: Employers’ National Insurance contributions will rise from 13.8% to 15%, and the threshold at which they have to pay it will drop from £9,100 to £5,000. But there’s some relief for employers in that employment allowance – which allows companies to reduce their NI liability – will increase from £5,000 to £10,500
Income tax: Despite predictions that Reeves might continue the freeze in income tax thresholds beyond 2028-29, she said that after that they would go up in line with inflation.
Capital Gains Tax: For higher rate tax payers, on assets such as shares this will go up from 20% to 24%, for lower rate tax payers, it will rise from 10% to 18%. On residential property, the rates will remain at 24% and 18%.
Non-dom taxation: The non-dom tax regime will be abolished from April 2025
Carer’s Allowance: Full-time carers will be able to earn more without losing their allowance – the maximum earnings threshold will rise from £151 to £195 a week
Alcohol duty: Tax on draught drinks will be cut by 1.7%, while non-draught drinks will see a rise in line with RPI – the higher measure of inflation
Fuel duty: The 5p cut to fuel duty on petrol and diesel, due to end in April 2025, will be kept for another year
Stamp duty: From tomorrow, the stamp duty land surcharge for second-homes raises by 2% to 5%
Air passenger duty: On private jets, Reeves is increasing the rate of air passenger duty by a further 50%
Personal Tax
The Labour Government will retain the Personal Tax Allowance and Basic rate band announced by the previous Government until 2028, after which they will increase with inflation. Personal allowances will still be reduced by £1 for every £2 a person’s income exceeds £100,000.
It is worth noting the Scottish Parliament has had the power for a number of years to vary the tax rates and thresholds of Non-Savings, Non-Dividend income for Scottish taxpayers. The differential between Scotland and the rest of the UK in this respect has grown quite significantly.
The Wales Act 2014 gave the National Assembly of Wales the power to vary the tax rates in respect of Welsh resident taxpayers as regards Non-Savings and Non-Dividend income. However, to date they have continued to set income tax rates in line with those announced by the UK Government. The Welsh Government will publish their draft budget on 10th December 2024.
Band
Taxableincome
2025/26
2024/25
Allowance
£0 to £12,570
0%
0%
Basic
£12,571 to £50,270
20%
20%
Higher
£50,271 to £125,140
40%
40%
AddiAonal
Over £125,140
45%
45%
Tax tip
If you are a sole trader or property landlord and your turnover exceeds £50,000 during the 2024/25 tax year you may fall under Making Tax Digital for Income Tax rules from April 2026 which includes quarterly reporting. If you are both a sole trader and a property landlord then aggregate the two turnovers together when applying the £50,000 threshold. Are you ready for this? If not, we can help.
Options to consider deferring the MTD compliant requirement might be creating a partnership or incorporating the business.
National Insurance
The Chancellor retained the current rates of National Insurance paid by employees, as well as rates for the self-employed will remain the same.
From 6 April 2025, Employers National Insurance will increase to 15% from the current 13.8%. The limit from which Employers National Insurance is due will reduce from £9,100 per employee to £5,000 until 5 April 2028.
In addition Class 1A National Insurance will increase to 15%. This rate is payable by employers on certain benefits provided to employees. The Employment Allowance will increase from £5,000 to £10,500 from 6 April 2025 and the current restriction regarding the previous years liability will be removed.
NationalInsurance(NI)
2024/25
2025/26
Class 1 NI employees – earnings between £12,570 – £50,270
8%
8%
Class 1 NI employees – earnings more than £50,270
2%
2%
Class 1 NI employers – earnings more than £9,100
13.8%
15.0%
Class 1A Benefits in kind
13.8%
15.0%
Class 1B NI PAYE settlement agreements
13.8%
15.0%
Class 4 NI self-employed – Profits between £12,570 – £50,270
6%
6%
Class 4 NI self-employed earnings more than £50,270
2%
2%
Tax tip
It is worth reviewing your NIC records at least every 5 years, whilst it is fresh in your memory, to ensure they are correct and up to date. National Insurance contributions protect your rights to certain state benefits and contribute towards your state pension. We are happy to carry out this review for you.
Tax tip
If you have more than one employment you may pay too much employees national insurance. HM Revenue & Customs can request the second employer to operate a lower rate to ensure the correct amount is paid. Refunds may be possible if national insurance has been overpaid in earlier years
Dividend Rate Bands
The dividend allowance will remain at £500 from 6th April 2025. There will be no change to the dividend tax rates.
Band
2024/25
2025/26
Dividend ordinary rate
8.75%
8.75%
Dividend upper rate
33.75%
33.75%
Dividend additional rate
39.35%
39.35%
Tax tip
With the dividend allowance threshold at only £500, is it worthwhile transferring some shares to a spouse/civil partner to maximise it. Do you have control over when a dividend can be paid out? If so have you made use of the £500 zero rate threshold for this tax year?
Tax tip
if you are an employer carry out a regular review to ensure that you are adhering to the National Minimum Wage Regulations. Failure to comply, can result in a penalty of up to 200% of the liability due and any underpayment of wages can go back up to 6 years using the current NMW rates. Please contact us if you require assistance.
National Minimum Wage
The National Minimum Wage (NMW) and the National Living Wage (NLW) rates will increase by 6.7% from 1 April 2025.
currently
from 1-4-25
Worker 21 years+
£11.44
£12.21
Worker 18 – 20
£8.60
£10.00
Worker under 18
£6.40
£7.55
Apprentice
£6.40
£7.55
Pensions
The annual pension allowance, which impacts on how much individuals can contribute to their pension schemes will remain at £60,000 for 2025/26.
The Money Purchase Annual Allowance and Tapered Annual Allowance will remain at £10,000 from 6 April 2025. In addition, the Tapered Annual Allowance will remain at £260,000.
From 6 April 2027 the government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes.
The pension tax free lump sum percentage will remain at 25% of the pension value up to a maximum of £268,275.
From 30th October 2024, pension transfers from tax relieved UK pension to Qualified Registered Overseas Pension Schemes (QROPS) in the EEA and Gibraltar will be subject to a 25% charge, unless another exclusion applies.
Tax tip
It is worth having an annual pension review, to ensure you maximise the use of all the pension allowances which may be available to you and to do so in the most tax efficient way. We are happy to carry out this review for you.
Please talk to a qualified Financial adviser before taking any actions with regard to Pensions
State Pension
Under the triple lock, the State Pension will rise in line with the highest of average earnings, inflation or 2.5%. The Government have announced an increase to the State Pension of 4.1%. The new State Pension increases from £221.20 to £230.30 per week in April 2025, while the full basic State Pension will increase from £169.50 to £176.45 per week.
Tax tip
Consider making voluntary national insurance contributions to fill the gap years in your state pension history. From 5th April 2025 you can go as far back as April 2006. Each year would cost you just over £824. After that date you can only go back 6 tax years. The cost for each year would then be based upon the voluntary Class 3 national insurance rate applicable for that current year. Each additional year could result in an extra £342 state pension (based upon 2025/26 figures) on an annual basis.
Capital Gains Tax
The main rates of Capital Gains Tax will increase from 10% and 20% to 18% and 24% respectively for disposals on or after 30 October 2024.
The rate of Capital Gains Tax on the disposal of residential property remains the same.
There is no change to the capital gains tax annual exempt amount available. This is the tax free allowance available against taxable gains.
Tax tip
Before you sell an asset, such as shares or property, please speak to us. There may be planning opportunities prior to the sale to reduce the potential capital gains tax.
Gainsfor
Before 30 Oct
2024
From 30 Oct
2024
Residential property to basic rate limit
18%
18%
Residential property above basic rate
24%
24%
Residential property for Trusts and personal representatives
24%
24%
Other assets to basic rate limit
10%
18%
Other assets above basic rate limit
20%
24%
Other assets for Trusts and personal representatives
20%
24%
Business Asset Disposal relief
10%
10%
Investors relief
10%
10%
Business Asset Disposal Relief
The rate of Capital Gains Tax which applies to Business Asset Disposal Relief and Investors Relief will increase from 10% for disposals on or after 6 April 2025 to 14%, with a further increase the following year to 18%.
Inheritance Tax
The Chancellor has retained the £325,000 Nil Rate Band, the £175,000 Residence Nil Rate Band (RNRB) and the tapering limit for RNRB at £2 million until 5 April 2030.
The tax rates for Inheritance Tax remain unchanged, with the main rate staying at 40%.
From 6 April 2026, the 100% rates of Agricultural Property Relief and Business Property Relief will be restricted to the first £1 million of combined agricultural and business property, with the excess relieved at 50%.
Agricultural Property Relief (APR) is a relief from Inheritance Tax on the agricultural value of land and other property that is owned and occupied for the purposes of agriculture.
Business Property Relief (BPR) is a relief from Inheritance Tax. Business owners may receive relief at either 100% or 50%, dependent on circumstances. Business property relief is available after an ownership period of two years.
COMPANY TAXATION
There were no new announcements for corporation tax. From 1st April 2025, the Corporation Tax main rate for non-ring fenced profits will remain at 25% for profits over £250,000
The small profits rate (SPR) will continue at 19% for companies with profits of £50,000 or less. The small profits rate will not apply to close investment-holding companies.
Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.
If the total profits are below £250,000, the effective rate for profits between these limits is called ‘Marginal Rate’ and shown above
Capital Allowances
This Budget has not changed the ability for companies to claim a 100% first year allowance (FYA) for main rate expenditure (known as Full Expensing) and 50% FYA for special rate expenditure. These allowances are only available to companies.
The 100% Annual Investment Allowance deduction for expenditure incurred of up to £1 million in purchasing plant & machinery also remains in place.
The 100% FYA for qualifying expenditure on zero- emission cars and on plant or machinery for electric vehicle charge-points has been extended to 31st March 2026 for Corporation Tax purposes and to 5th April 2026 for Income Tax purposes.
Company car and fuel
Appropriate percentages for zero emission and electric vehicles will increase by 2 percentage points per tax year in 2028/29 and 2029/30, rising to an appropriate percentage of 9% in tax year 2029/30.
Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometer, including hybrid vehicles, will rise to 18% in tax year 2028/29 and 19% in tax year 2029/30.
Appropriate percentages for all other vehicle bands will increase by 1 percentage point per year in tax years 2028/29 and 2029/30. This will be to a maximum appropriate percentage of 38% for tax year 2028/29 and 39% for tax year 2029/30.
The car fuel benefit charge multiplier will be £28,200 in the 2025/26 tax year.
Van and Fuel Benefit
The van benefit charge will be £4,020 and fuel benefit charge £769 in the 2025/26 tax year.
The Government will no longer maintain the treatment of double cab pick-up vehicles with a payload of one tonne or more as goods vehicles.
HMRC is updating guidance to clarify the position in respect of such vehicles which will be treated as cars for capital allowances, for benefits in kind and for some deductions from business profits. Transitional arrangements will also apply.
Vehicle Excise Duty (VED)
The Budget announced VED first year rates for new cars registered on or after 1 April 2025.
Zero emission cars will pay the lowest first year rate at £10 until 2029/30.
Rates for cars emitting 1g/km to 50g/km of CO2, including hybrid vehicles, will increase to £110.
Rates for cars emitting 51g/km to 75g/km of CO2, including hybrid vehicles, will increase to £130.
All other rates for cars emitting 76g/km of CO2 and above will double from their current level.
VAT
The taxable turnover threshold for determining whether a business must register for VAT remains at £90,000 and the point at which a business can apply to deregister will also remain at £88,000.
All education services and vocational training supplied by a private school or a ‘connected person’ for a fee will be liable to VAT at the standard rate of 20% starting on or after 1st January 2025.
Board and lodging services closely related to such supplies will also be liable to VAT at 20 %, including when supplied by a ‘connected person’.
Any school fees paid on or after 29th July 2024 relating to the period from 1st January 2025 will also be liable to the standard rate of VAT
The provision of nursery services to children below school age will remain VAT exempt as will state school education and sixth form colleges where no fee is charged.
Where a Special Education Needs place is provided at a private school and is funded by a local authority (LA) or similar body, the LA will be able to claim a VAT refund on the fees charged.
Tax tip
When first registering for VAT, you may be able to claim input VAT on goods purchased in the 4-year period before registration where those goods have been used in the business and are all owned on the first date of registration. This includes both stock and assets.
When first registering for VAT, you may be able to claim input VAT on services purchased in the previous 6 months for business purposes, unless already recharged to a customer prior to registration.
If the supplies you make are outside the scope of UK VAT (e.g. a provision of services to an overseas customer), but they would be taxable VAT supplies if they were made in the UK, then VAT input tax on expenditure incurred in relation to that supply may be claimed back.
Annual Tax on Enveloped Dwellings (ATED)
The ATED charge for those property companies liable to pay it, has been increased by 1.7% in respect of the 2025/26 year.
Stamp Duty Land Tax (SDLT)
The temporary SDLT residential rates and thresholds which applied from 23 September 2022 comes to an end on 31 March 2025. The SDLT residential rates and thresholds in existence immediately prior to that date will apply from 1st April 2025.
The SDLT surcharge on acquiring an interest, in excess of £40,000, in a second residential property increases from 3% to 5% from 30 October 2024.
Corporate bodies purchasing residential property valued at more than £500,000 will be charged SDLT at 17% from 31st October 2024. unless an applicable relief applies.
England &NorthernIreland SDLTresidentialrate
Property/Lease premium/ Transfer value
un6l 31-3-25
from 1-4-25
Up to £125,000
Zero
Zero
£125,001 to £250,000
Zero
2%
£250,001 to £925,000
5%
5%
£925,001 to £1,500,000
10%
10%
Above £1,500,000
12%
12%
Non-Dom Tax status
From 6 April 2025, the current remittance basis of taxation will be abolished for UK resident non-domiciled individuals.
This will be replaced with a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax resident after a period of 10 tax years of non- UK residence.
Qualifying individuals will not pay tax on FIG arising in the first 4 tax years after becoming UK tax resident and will be able to bring these funds to the UK free from any additional charges.
They will not pay tax on non-resident trust distributions either.
Individuals, who on 6 April 2025, have been tax resident in the UK for less than 4 years (after 10 years of non-UK tax residence) will be able to use this new regime for any tax year of UK residence in the remainder of those 4 years.
The protection from tax on foreign income and gains arising within settlor-interested trust structures will no longer be available for non-domiciled and deemed domiciled individuals who do not qualify for the 4- year foreign income and gains regime.
Transitionally, for Capital Gains Tax purposes, current and past remittance basis users will be able to rebase foreign assets they held on 5 April 2017 to their value at that date when they dispose of them.
Any foreign income and gains that arose on or before the 5 April 2025, while an individual was taxed under the remittance basis, will continue to be taxed when remitted to the UK under the current rules. This includes remittances by those who are eligible for the new 4-year foreign income and gains regime.
A new Temporary Repatriation Facility will be available for individuals who have previously claimed the remittance basis. They will be able to designate and remit at a reduced rate foreign income and gains that arose prior to the changes. This includes unattributed foreign income and gains held within trust structures.
The Temporary Repatriation Facility (TRF) will be available for a limited period of 3 tax years, from 2025/2026. The TRF rate will be 12% for the first 2 years and 15% in the final tax year of operation.
The measure extends the period of Overseas Workday Relief to 4 years to align with the new 4-year foreign income and gains regime.
From 6 April 2025, Overseas Workday Relief will be subject to a financial limit on the amount of relief that can be claimed, this is the lower of £300,000 or 30% of an individual’s total employment income.
Furnished Holiday Lettings
The announcement that the FHL regime was to be abolished was in the Spring 2024 Budget. However, it did not get enacted before the General Election came about.
The Labour Government have since confirmed its demise. FHL will be treated the same as long term lets from April 2025 as regards income tax. Loan interest relief will be restricted to a 20% income tax credit from April 2025.
Where an existing FHL business has an ongoing capital allowance pool of expenditure, it can continue to claim writing down allowances on that pool post April 2025 but not in respect of new expenditure after that date.
There is an anti-forestalling rule which, with minor exceptions, prevents FHL owners obtaining capital gains relief using unconditional contracts with effect from 6th March 2024.
FHL income will not be counted as relevant income for pension contribution purposes from 6th April 2025 onwards.
Certain capital gains tax reliefs will cease from April 2025 except where the FHL conditions are satisfied up to April 2025 and the criterion for that particular relief includes conditions which can still come into play post April 2025.
Where the FHL business ceased prior to 6th April 2025, business asset disposal relief (the 10% capital gains tax rate) may still apply to a disposal of the property within 3 years of the FHL business coming to an end.
High Income Child Benefit Charge (HICBC)
The individual’s High Income Child Benefit Charge (HICBC) adjusted net income threshold will remain at £60,000
For individuals with income between £60,000 and £80,000, the rate at which HICBC is charged is halved, and will equal one per cent for every £200 of income that is more than £60,000.
Individual Savings Account (ISA)
The existing ISA allowance limit of £20,000 will remain in place for the 2025/26 tax year.
The Junior ISA allowance limit and Child Trust Fund subscription limit will continue at £9,000 per annum.
Employee Ownership Trusts (EOT)
There is a tightening of the EOT rules as regards disposal made to the trustees of an EOT on or after 30 October 2024.
The revised tax treatment for contributions made to an EOT to repay the former owner and the changes to the Income Tax relief conditions for annual bonus payments to employees of EOT controlled companies also has effect from 30 October 2024.
Legislation will be introduced to restrict former owners or persons connected with former owners from retaining control of company’s post-sale to an EOT by virtue of control (direct or indirect) of the EOT.
Trustees must take reasonable steps to ensure that the consideration paid to acquire the company shares does not exceed market value.
If qualifying condition surrounding the EOT are breached, the timeframe to claw-back tax relief from the vendor has been extended to the end of the 4th tax year following the end of the tax year of disposal.
A requirement that individuals provide within their claim for Capital Gains Tax relief information on the sale proceeds and the number of employees of the company at the time of disposal.
Tobacco & vaping duty
With effect from 6pm on 30th October 2024 duty rates for all tobacco products will increase using the TD escalator by 2% above inflation (based on the Retail Price Index (RPI)). The rate for hand-rolling tobacco by an additional 10% above the escalator, to 12% above RPI.
There will be a one-off TD increase of £2.20 per 100 cigarettes or 50 grams of tobacco, effective from 1 October 2026.
With effect from 1st October 2026 there will be a single VPD rate of £2.20 per 10ml of vaping liquid.
Alcohol duty
AD duty rates on draught products below 8.5% alcohol by volume (ABV), will be cut by 1.7%, so that an average ABV strength pint will pay 1 penny less in duty. AD duty rates on non-draught products will increase in line with RPI inflation. These AD measures will take effect from 1 February 2025.
Additional Announcements
To help support aims to reduce waiting times, there will be an additional £1.5 billion capital investment into new surgical hubs and scanners, alongside £70 million for new radiotherapy machines.
£1.8 billon will be allocated for the expansion of government-funded childcare, with a further £15 million of capital funding for school-based nurseries.
The first stage of the plan will pay for 300 new or expanded nurseries across England.
The government will triple investment into free breakfast clubs to £30 million in 2025/26.
From the beginning of next week, the subsidised £2 bus fare cap will be increased to £3. The subsidy was due to come to an end in December this year, but the government has extended it for a further year.
The Chancellor has raised the limit people can earn before being ineligible for the Carers Allowance from £151 a week to £181.
To keep more children in stable and loving homes, £44 million of funding has been announced to support kinship and foster carers.
£240 million Get Britain Working package to include work, skills and health support for disabled people and the long-term sick has been announced.
Benefit reform will be accelerated this year, with 800,000 people on the old Employment and Support Allowance (ESA) benefit to be moved onto Universal Credit (UC) from this autumn instead of 2028.
The Energy Profits Levy will increase from 35% to 38% from 1st November 2024 until 31st March 2030.
The alternative finance (AF) legislation is amended, with effect from 30th October 2024, to ensure that where an existing asset is used to raise finance using AF, the tax outcome is broadly the same as conventional financing.
The government is extending the employer National Insurance contributions relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026.
The late payment interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5% from April 2025.
The Help to Save Scheme will be extended a further two years to 5th April 2027.
Making Tax Digital (MTD) for Income Tax will be extended to sole traders and landlords with income over £20,000 by the end of this Parliament.
Autumn Budget 2024
The UK’s Autumn Budget 2024 of October this year presented by Chancellor Rachel Reeves, outlined significant measures with a focus on tax increases, public services funding, and social welfare improvements.
Highlights
National Insurance: Employers’ National Insurance contributions will rise from 13.8% to 15%, and the threshold at which they have to pay it will drop from £9,100 to £5,000. But there’s some relief for employers in that employment allowance – which allows companies to reduce their NI liability – will increase from £5,000 to £10,500
Income tax: Despite predictions that Reeves might continue the freeze in income tax thresholds beyond 2028-29, she said that after that they would go up in line with inflation.
Capital Gains Tax: For higher rate tax payers, on assets such as shares this will go up from 20% to 24%, for lower rate tax payers, it will rise from 10% to 18%. On residential property, the rates will remain at 24% and 18%.
Non-dom taxation: The non-dom tax regime will be abolished from April 2025
Carer’s Allowance: Full-time carers will be able to earn more without losing their allowance – the maximum earnings threshold will rise from £151 to £195 a week
Alcohol duty: Tax on draught drinks will be cut by 1.7%, while non-draught drinks will see a rise in line with RPI – the higher measure of inflation
Fuel duty: The 5p cut to fuel duty on petrol and diesel, due to end in April 2025, will be kept for another year
Stamp duty: From tomorrow, the stamp duty land surcharge for second-homes raises by 2% to 5%
Air passenger duty: On private jets, Reeves is increasing the rate of air passenger duty by a further 50%
Personal Tax
The Labour Government will retain the Personal Tax Allowance and Basic rate band announced by the previous Government until 2028, after which they will increase with inflation. Personal allowances will still be reduced by £1 for every £2 a person’s income exceeds £100,000.
It is worth noting the Scottish Parliament has had the power for a number of years to vary the tax rates and thresholds of Non-Savings, Non-Dividend income for Scottish taxpayers. The differential between Scotland and the rest of the UK in this respect has grown quite significantly.
The Wales Act 2014 gave the National Assembly of Wales the power to vary the tax rates in respect of Welsh resident taxpayers as regards Non-Savings and Non-Dividend income. However, to date they have continued to set income tax rates in line with those announced by the UK Government. The Welsh Government will publish their draft budget on 10th December 2024.
Tax tip
If you are a sole trader or property landlord and your turnover exceeds £50,000 during the 2024/25 tax year you may fall under Making Tax Digital for Income Tax rules from April 2026 which includes quarterly reporting. If you are both a sole trader and a property landlord then aggregate the two turnovers together when applying the £50,000 threshold. Are you ready for this? If not, we can help.
Options to consider deferring the MTD compliant requirement might be creating a partnership or incorporating the business.
National Insurance
The Chancellor retained the current rates of National Insurance paid by employees, as well as rates for the self-employed will remain the same.
From 6 April 2025, Employers National Insurance will increase to 15% from the current 13.8%. The limit from which Employers National Insurance is due will reduce from £9,100 per employee to £5,000 until 5 April 2028.
In addition Class 1A National Insurance will increase to 15%. This rate is payable by employers on certain benefits provided to employees. The Employment Allowance will increase from £5,000 to £10,500 from 6 April 2025 and the current restriction regarding the previous years liability will be removed.
Tax tip
It is worth reviewing your NIC records at least every 5 years, whilst it is fresh in your memory, to ensure they are correct and up to date. National Insurance contributions protect your rights to certain state benefits and contribute towards your state pension. We are happy to carry out this review for you.
Tax tip
If you have more than one employment you may pay too much employees national insurance. HM Revenue & Customs can request the second employer to operate a lower rate to ensure the correct amount is paid. Refunds may be possible if national insurance has been overpaid in earlier years
Dividend Rate Bands
The dividend allowance will remain at £500 from 6th April 2025. There will be no change to the dividend tax rates.
Tax tip
With the dividend allowance threshold at only £500, is it worthwhile transferring some shares to a spouse/civil partner to maximise it. Do you have control over when a dividend can be paid out? If so have you made use of the £500 zero rate threshold for this tax year?
Tax tip
if you are an employer carry out a regular review to ensure that you are adhering to the National Minimum Wage Regulations. Failure to comply, can result in a penalty of up to 200% of the liability due and any underpayment of wages can go back up to 6 years using the current NMW rates. Please contact us if you require assistance.
National Minimum Wage
The National Minimum Wage (NMW) and the National Living Wage (NLW) rates will increase by 6.7% from 1 April 2025.
Pensions
The annual pension allowance, which impacts on how much individuals can contribute to their pension schemes will remain at £60,000 for 2025/26.
The Money Purchase Annual Allowance and Tapered Annual Allowance will remain at £10,000 from 6 April 2025. In addition, the Tapered Annual Allowance will remain at £260,000.
From 6 April 2027 the government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes.
The pension tax free lump sum percentage will remain at 25% of the pension value up to a maximum of £268,275.
From 30th October 2024, pension transfers from tax relieved UK pension to Qualified Registered Overseas Pension Schemes (QROPS) in the EEA and Gibraltar will be subject to a 25% charge, unless another exclusion applies.
Tax tip
It is worth having an annual pension review, to ensure you maximise the use of all the pension allowances which may be available to you and to do so in the most tax efficient way. We are happy to carry out this review for you.
Please talk to a qualified Financial adviser before taking any actions with regard to Pensions
State Pension
Under the triple lock, the State Pension will rise in line with the highest of average earnings, inflation or 2.5%. The Government have announced an increase to the State Pension of 4.1%. The new State Pension increases from £221.20 to £230.30 per week in April 2025, while the full basic State Pension will increase from £169.50 to £176.45 per week.
Tax tip
Consider making voluntary national insurance contributions to fill the gap years in your state pension history. From 5th April 2025 you can go as far back as April 2006. Each year would cost you just over £824. After that date you can only go back 6 tax years. The cost for each year would then be based upon the voluntary Class 3 national insurance rate applicable for that current year. Each additional year could result in an extra £342 state pension (based upon 2025/26 figures) on an annual basis.
Capital Gains Tax
The main rates of Capital Gains Tax will increase from 10% and 20% to 18% and 24% respectively for disposals on or after 30 October 2024.
The rate of Capital Gains Tax on the disposal of residential property remains the same.
There is no change to the capital gains tax annual exempt amount available. This is the tax free allowance available against taxable gains.
Tax tip
Before you sell an asset, such as shares or property, please speak to us. There may be planning opportunities prior to the sale to reduce the potential capital gains tax.
2024
2024
Business Asset Disposal Relief
The rate of Capital Gains Tax which applies to Business Asset Disposal Relief and Investors Relief will increase from 10% for disposals on or after 6 April 2025 to 14%, with a further increase the following year to 18%.
Inheritance Tax
The Chancellor has retained the £325,000 Nil Rate Band, the £175,000 Residence Nil Rate Band (RNRB) and the tapering limit for RNRB at £2 million until 5 April 2030.
The tax rates for Inheritance Tax remain unchanged, with the main rate staying at 40%.
From 6 April 2026, the 100% rates of Agricultural Property Relief and Business Property Relief will be restricted to the first £1 million of combined agricultural and business property, with the excess relieved at 50%.
Agricultural Property Relief (APR) is a relief from Inheritance Tax on the agricultural value of land and other property that is owned and occupied for the purposes of agriculture.
Business Property Relief (BPR) is a relief from Inheritance Tax. Business owners may receive relief at either 100% or 50%, dependent on circumstances. Business property relief is available after an ownership period of two years.
COMPANY TAXATION
There were no new announcements for corporation tax. From 1st April 2025, the Corporation Tax main rate for non-ring fenced profits will remain at 25% for profits over £250,000
The small profits rate (SPR) will continue at 19% for companies with profits of £50,000 or less. The small profits rate will not apply to close investment-holding companies.
Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.
If the total profits are below £250,000, the effective rate for profits between these limits is called ‘Marginal Rate’ and shown above
Capital Allowances
This Budget has not changed the ability for companies to claim a 100% first year allowance (FYA) for main rate expenditure (known as Full Expensing) and 50% FYA for special rate expenditure. These allowances are only available to companies.
The 100% Annual Investment Allowance deduction for expenditure incurred of up to £1 million in purchasing plant & machinery also remains in place.
The 100% FYA for qualifying expenditure on zero- emission cars and on plant or machinery for electric vehicle charge-points has been extended to 31st March 2026 for Corporation Tax purposes and to 5th April 2026 for Income Tax purposes.
Company car and fuel
Appropriate percentages for zero emission and electric vehicles will increase by 2 percentage points per tax year in 2028/29 and 2029/30, rising to an appropriate percentage of 9% in tax year 2029/30.
Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometer, including hybrid vehicles, will rise to 18% in tax year 2028/29 and 19% in tax year 2029/30.
Appropriate percentages for all other vehicle bands will increase by 1 percentage point per year in tax years 2028/29 and 2029/30. This will be to a maximum appropriate percentage of 38% for tax year 2028/29 and 39% for tax year 2029/30.
The car fuel benefit charge multiplier will be £28,200 in the 2025/26 tax year.
Van and Fuel Benefit
The van benefit charge will be £4,020 and fuel benefit charge £769 in the 2025/26 tax year.
The Government will no longer maintain the treatment of double cab pick-up vehicles with a payload of one tonne or more as goods vehicles.
HMRC is updating guidance to clarify the position in respect of such vehicles which will be treated as cars for capital allowances, for benefits in kind and for some deductions from business profits. Transitional arrangements will also apply.
Vehicle Excise Duty (VED)
The Budget announced VED first year rates for new cars registered on or after 1 April 2025.
Zero emission cars will pay the lowest first year rate at £10 until 2029/30.
Rates for cars emitting 1g/km to 50g/km of CO2, including hybrid vehicles, will increase to £110.
Rates for cars emitting 51g/km to 75g/km of CO2, including hybrid vehicles, will increase to £130.
All other rates for cars emitting 76g/km of CO2 and above will double from their current level.
VAT
The taxable turnover threshold for determining whether a business must register for VAT remains at £90,000 and the point at which a business can apply to deregister will also remain at £88,000.
All education services and vocational training supplied by a private school or a ‘connected person’ for a fee will be liable to VAT at the standard rate of 20% starting on or after 1st January 2025.
Board and lodging services closely related to such supplies will also be liable to VAT at 20 %, including when supplied by a ‘connected person’.
Any school fees paid on or after 29th July 2024 relating to the period from 1st January 2025 will also be liable to the standard rate of VAT
The provision of nursery services to children below school age will remain VAT exempt as will state school education and sixth form colleges where no fee is charged.
Where a Special Education Needs place is provided at a private school and is funded by a local authority (LA) or similar body, the LA will be able to claim a VAT refund on the fees charged.
Tax tip
When first registering for VAT, you may be able to claim input VAT on goods purchased in the 4-year period before registration where those goods have been used in the business and are all owned on the first date of registration. This includes both stock and assets.
When first registering for VAT, you may be able to claim input VAT on services purchased in the previous 6 months for business purposes, unless already recharged to a customer prior to registration.
If the supplies you make are outside the scope of UK VAT (e.g. a provision of services to an overseas customer), but they would be taxable VAT supplies if they were made in the UK, then VAT input tax on expenditure incurred in relation to that supply may be claimed back.
Annual Tax on Enveloped Dwellings (ATED)
The ATED charge for those property companies liable to pay it, has been increased by 1.7% in respect of the 2025/26 year.
Stamp Duty Land Tax (SDLT)
The temporary SDLT residential rates and thresholds which applied from 23 September 2022 comes to an end on 31 March 2025. The SDLT residential rates and thresholds in existence immediately prior to that date will apply from 1st April 2025.
The SDLT surcharge on acquiring an interest, in excess of £40,000, in a second residential property increases from 3% to 5% from 30 October 2024.
Corporate bodies purchasing residential property valued at more than £500,000 will be charged SDLT at 17% from 31st October 2024. unless an applicable relief applies.
England & Northern Ireland SDLT residential rate
Non-Dom Tax status
From 6 April 2025, the current remittance basis of taxation will be abolished for UK resident non-domiciled individuals.
This will be replaced with a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax resident after a period of 10 tax years of non- UK residence.
Qualifying individuals will not pay tax on FIG arising in the first 4 tax years after becoming UK tax resident and will be able to bring these funds to the UK free from any additional charges.
They will not pay tax on non-resident trust distributions either.
Individuals, who on 6 April 2025, have been tax resident in the UK for less than 4 years (after 10 years of non-UK tax residence) will be able to use this new regime for any tax year of UK residence in the remainder of those 4 years.
The protection from tax on foreign income and gains arising within settlor-interested trust structures will no longer be available for non-domiciled and deemed domiciled individuals who do not qualify for the 4- year foreign income and gains regime.
Transitionally, for Capital Gains Tax purposes, current and past remittance basis users will be able to rebase foreign assets they held on 5 April 2017 to their value at that date when they dispose of them.
Any foreign income and gains that arose on or before the 5 April 2025, while an individual was taxed under the remittance basis, will continue to be taxed when remitted to the UK under the current rules. This includes remittances by those who are eligible for the new 4-year foreign income and gains regime.
A new Temporary Repatriation Facility will be available for individuals who have previously claimed the remittance basis. They will be able to designate and remit at a reduced rate foreign income and gains that arose prior to the changes. This includes unattributed foreign income and gains held within trust structures.
The Temporary Repatriation Facility (TRF) will be available for a limited period of 3 tax years, from 2025/2026. The TRF rate will be 12% for the first 2 years and 15% in the final tax year of operation.
The measure extends the period of Overseas Workday Relief to 4 years to align with the new 4-year foreign income and gains regime.
From 6 April 2025, Overseas Workday Relief will be subject to a financial limit on the amount of relief that can be claimed, this is the lower of £300,000 or 30% of an individual’s total employment income.
Furnished Holiday Lettings
The announcement that the FHL regime was to be abolished was in the Spring 2024 Budget. However, it did not get enacted before the General Election came about.
The Labour Government have since confirmed its demise. FHL will be treated the same as long term lets from April 2025 as regards income tax. Loan interest relief will be restricted to a 20% income tax credit from April 2025.
Where an existing FHL business has an ongoing capital allowance pool of expenditure, it can continue to claim writing down allowances on that pool post April 2025 but not in respect of new expenditure after that date.
There is an anti-forestalling rule which, with minor exceptions, prevents FHL owners obtaining capital gains relief using unconditional contracts with effect from 6th March 2024.
FHL income will not be counted as relevant income for pension contribution purposes from 6th April 2025 onwards.
Certain capital gains tax reliefs will cease from April 2025 except where the FHL conditions are satisfied up to April 2025 and the criterion for that particular relief includes conditions which can still come into play post April 2025.
Where the FHL business ceased prior to 6th April 2025, business asset disposal relief (the 10% capital gains tax rate) may still apply to a disposal of the property within 3 years of the FHL business coming to an end.
High Income Child Benefit Charge (HICBC)
The individual’s High Income Child Benefit Charge (HICBC) adjusted net income threshold will remain at £60,000
For individuals with income between £60,000 and £80,000, the rate at which HICBC is charged is halved, and will equal one per cent for every £200 of income that is more than £60,000.
Individual Savings Account (ISA)
The existing ISA allowance limit of £20,000 will remain in place for the 2025/26 tax year.
The Junior ISA allowance limit and Child Trust Fund subscription limit will continue at £9,000 per annum.
Employee Ownership Trusts (EOT)
There is a tightening of the EOT rules as regards disposal made to the trustees of an EOT on or after 30 October 2024.
The revised tax treatment for contributions made to an EOT to repay the former owner and the changes to the Income Tax relief conditions for annual bonus payments to employees of EOT controlled companies also has effect from 30 October 2024.
Legislation will be introduced to restrict former owners or persons connected with former owners from retaining control of company’s post-sale to an EOT by virtue of control (direct or indirect) of the EOT.
Trustees must take reasonable steps to ensure that the consideration paid to acquire the company shares does not exceed market value.
If qualifying condition surrounding the EOT are breached, the timeframe to claw-back tax relief from the vendor has been extended to the end of the 4th tax year following the end of the tax year of disposal.
A requirement that individuals provide within their claim for Capital Gains Tax relief information on the sale proceeds and the number of employees of the company at the time of disposal.
Tobacco & vaping duty
With effect from 6pm on 30th October 2024 duty rates for all tobacco products will increase using the TD escalator by 2% above inflation (based on the Retail Price Index (RPI)). The rate for hand-rolling tobacco by an additional 10% above the escalator, to 12% above RPI.
There will be a one-off TD increase of £2.20 per 100 cigarettes or 50 grams of tobacco, effective from 1 October 2026.
With effect from 1st October 2026 there will be a single VPD rate of £2.20 per 10ml of vaping liquid.
Alcohol duty
AD duty rates on draught products below 8.5% alcohol by volume (ABV), will be cut by 1.7%, so that an average ABV strength pint will pay 1 penny less in duty. AD duty rates on non-draught products will increase in line with RPI inflation. These AD measures will take effect from 1 February 2025.
Additional Announcements
To help support aims to reduce waiting times, there will be an additional £1.5 billion capital investment into new surgical hubs and scanners, alongside £70 million for new radiotherapy machines.
£1.8 billon will be allocated for the expansion of government-funded childcare, with a further £15 million of capital funding for school-based nurseries.
The first stage of the plan will pay for 300 new or expanded nurseries across England.
The government will triple investment into free breakfast clubs to £30 million in 2025/26.
From the beginning of next week, the subsidised £2 bus fare cap will be increased to £3. The subsidy was due to come to an end in December this year, but the government has extended it for a further year.
The Chancellor has raised the limit people can earn before being ineligible for the Carers Allowance from £151 a week to £181.
To keep more children in stable and loving homes, £44 million of funding has been announced to support kinship and foster carers.
£240 million Get Britain Working package to include work, skills and health support for disabled people and the long-term sick has been announced.
Benefit reform will be accelerated this year, with 800,000 people on the old Employment and Support Allowance (ESA) benefit to be moved onto Universal Credit (UC) from this autumn instead of 2028.
The Energy Profits Levy will increase from 35% to 38% from 1st November 2024 until 31st March 2030.
The alternative finance (AF) legislation is amended, with effect from 30th October 2024, to ensure that where an existing asset is used to raise finance using AF, the tax outcome is broadly the same as conventional financing.
The government is extending the employer National Insurance contributions relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026.
The late payment interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5% from April 2025.
The Help to Save Scheme will be extended a further two years to 5th April 2027.
Making Tax Digital (MTD) for Income Tax will be extended to sole traders and landlords with income over £20,000 by the end of this Parliament.
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