Autumn BUDGET 2024

The newly elected Government announced a  number of key changes which impact both individuals and UK employers/companies as outlined in this article.

Summary

Tax

The Chancellor announced policies on:

• National Insurance changes from 6 April 2025 -
  • the rate of employers' NIC will rise to 15% from the current 13.8%;
  • the secondary threshold, above which employers' NIC is payable will drop from £9,100 annually to £5,000, resulting in an additional £4,100 potentially subject to charge at the new higher rate; and
  • Increase in employment allowance from £5,000 to £10,500 from April 2025.  All UK employers will be able to benefit from this as the previous restriction i.e. where the employer Class 1 National Insurance contributions liability in a year had to be less than £100,000 has been removed.  
• Transfer pricing exemption - the Government will consult on bringing medium sized businesses within the scope of the UK's transfer pricing rules by reducing the existing thresholds of the small and medium sized enterprise (SME) exemption.  The government will maintain an exemption for small businesses.
• Capital Gains Tax - With effect from 30 October 2024, capital gains tax rates are increasing i.e. lower rate from 10% to 18% and the higher rate from 20% to 24%.
• Non-domicile tax regime - With effect from 6 April 2025, anyone who has been UK tax resident for more than 4 years will be subject to UK tax on worldwide income and capital gains.  New arrivals to the UK can make an election not be taxed on foreign income or gains for the first 4 years of residence provided they have been non-UK tax resident in the prior 10 consecutive years.  Similarly such individuals would also be eligible to claim Overseas Workday Relief (OWR) for the first 4 years of UK tax residence capped at the lower of £300,000 or 30% of income. 
• Inheritance Tax (IHT) - Regardless of domicile, all individuals will be subject to UK IHT once they have been UK tax resident for 10 years.
• Pensions - Currently pensions are excluded from IHT.  From April 2027, any value left in an individual's personal pension pot on death will be included in their IHT estate and taxed in the usual way.
• Stamp duty land tax - Buyers of second homes and buy to let properties in the UK are faced with an immediate increase in stamp duty land tax (SDLT).  With effect from 31 October 2024, the higher rate for additional dwellings increases from 3% to 5%.