The Autumn Budget 2024 has introduced a wave of changes across taxes, wages, business rates, and more. Aimed at supporting workers, adjusting business contributions, and ensuring fairer wealth distribution, this budget has something for everyone. From an increased minimum wage to higher capital gains taxes, it’s clear the government is reshaping the economic landscape to address the cost of living and support small businesses.
Here’s a breakdown of the main changes and how they might impact you, your family, or your business.
1. National Living Wage Boost
Starting April 2025, the national living wage will increase to £12.21 per hour. This is a welcome raise for workers but could mean higher payroll expenses for businesses. A full breakdown of the changes can be found below:
Current Rate | New Rate | |
21 and over | £11.44 | £12.21 |
18 to 20 | £8.60 | £10.00 |
Under 18 | £6.40 | £7.55 |
Apprentice | £6.40 | £7.55 |
2. Frozen Income Tax Bands & Higher National Insurance
The freeze on income tax bands means that over time, more of your earnings may be subject to taxation. Additionally, from April 2025, the Employer National Insurance contribution rate will increase from 13.8% to 15%, applied to a new, lower threshold of £5,000.
To support businesses with these changes, smaller businesses will benefit from an increased Employment Allowance, which rises from £5,000 to £10,500 to help offset the additional costs. For larger businesses, the Employment Allowance cap is being removed. This means employers with Employer National Insurance liabilities exceeding £100,000 in the previous tax year (if eligible) can now claim the full £10,500 Employment Allowance.
3. Capital Gains Tax (CGT) Increase
Capital Gains Tax rates have risen from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers. While this increase does not apply to residential property sales, it may impact the returns on other types of assets, making now a good time to reassess your investment strategy. This change took effect immediately on October 30, 2024.
4. Changes to Inheritance Tax and Pensions
The inheritance tax (IHT) threshold remains frozen at £325,000, but a major change is coming to pension inheritance: starting in 2027, any pension passed to beneficiaries (other than a spouse) will count toward the taxable estate. For those affected, proactive estate planning could be beneficial. Additionally, pension funds and death benefits will become subject to inheritance tax from April 6, 2027.
In addition to existing nil-rate bands and exemptions, the current 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) will remain in place for the first £1 million of combined agricultural and business property. Beyond this amount, the relief will drop to 50%. This also applies to shares classified as “not listed” on recognised stock exchanges, like the Alternative Investment Market (AIM). These changes will take effect on April 6, 2026.
5. New VAT on Private School Fees
Starting in January 2025, a 20% VAT will be applied to private school fees, and from April 1, 2025, private schools will no longer be eligible for charitable business rate relief. These changes may lead to increased education costs for affected families.
6. Higher Stamp Duty on Second Properties
Stamp Duty Land Tax (SDLT) will increase from 3% to 5% surcharge on additional homes. Corporate property buyers will also see increased rates, making it essential for investors to factor in these costs.
7. Electric Vehicle and Car Tax Adjustments
Tax rates for company and electric vehicles are set to increase, with zero-emission cars facing up to a 19% tax rate by 2029. Companies might want to rethink vehicle policies or explore other fleet options.
8. Business Rate Relief for Small Businesses
Good news for small businesses, especially in hospitality and retail: they’ll receive a 40% discount on business rates, and the small business rate multiplier remains frozen. This support aims to ease financial pressures for smaller companies but is capped at £110,000 per business per year.
9. Frozen Fuel Duty and Higher Air Travel Taxes
While fuel duty remains frozen for regular drivers, Air Passenger Duty will rise for private jets, contributing to the push for greener travel options and offsetting environmental impacts.
10. Increased Childcare Support and Home Energy Initiatives
To help with living costs, there’s a new £300 childcare cost-of-living payment, plus expanded support for home insulation and boiler upgrades. These initiatives aim to reduce household energy bills over the long term.
11. Corporate Tax Stability
The corporate tax rate will stay at 25%, giving businesses stability in their tax planning. This rate freeze allows companies to continue operating without additional corporate tax burdens.
12. Changes to Research & Development (R&D) Tax Credits
In a bid to encourage innovation, the government is increasing R&D tax credits for small and medium-sized enterprises (SMEs) involved in research and development. This allows eligible businesses to claim a higher percentage of their R&D spending, making it more attractive to invest in new projects.
Time to Plan Ahead to Stay Prepared
The Autumn Budget 2024 brings notable changes to income, inheritance, property, and business expenses. Reviewing personal and business strategies now – whether for tax planning, payroll adjustments, or investments – will help you prepare and make the most of these updates. The economic landscape is shifting, and being proactive in managing your finances is more important than ever.
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