Category: Tax and NI

Following lots of pre-budget announcements, the Chancellor today delivered an eagerly awaited autumn budget statement, with a number of tax rises aimed at plugging the “Black Hole”. There is a lot to highlight this year, but below is a summary of some of the main points of interest, and the full statement can be found here.

Business taxes and wages

The Employer National Insurance rate will increase to 15% from 13.8% from April 2025, whilst the threshold at which they are taxed will decrease to £5,000 from £9,100 per employee. Together this would mean an additional £806 payable on an employee salary of £25,000 per annum.

However, to offset this for the smallest businesses, the Employment Allowance will increase to £10,500 from £5,000. The Employment Allowance allows employers to reduce their total national insurance liability by up to this amount, so overall most of the smallest businesses will not be as worse off as first thought, and some may actually be better off. But one person director owned companies with no other employees might be badly affected by the above changes because currently they cannot access the Employment Allowance (unless this changes).

The National Minimum Wage will rise to £12.21 per hour from April (£10 for 18 to 20 year olds), with a phased increase towards a single adult rate.

Hidden in the budget were details that the government will start treating double cab pick-up vehicles with a payload of one tonne or more as cars for certain tax purposes from April 2025, including for benefits in kind, and deductions from profits. Transitional benefit in kind arrangements will apply though until 2019 for employers that have purchased, leased, or ordered a vehicle before 6 April 2025, but this will be a substantial increase in the benefit in kind tax charge. We await more details about this.

There will be no increase to corporation tax at this time.

Personal taxes

There will be no rise in income tax or National Insurance for private individuals, but the freeze on the annual thresholds will remain until April 2028, at which point they will increase in line with inflation. The freeze on the allowances effectively means more tax is payable if your income rises by inflation though in the meantime.

Capital gains tax rates will increase to 18% (basic rate) and 24% (higher rate) for all types of asset disposals, to match those currently paid on residential property. This is with immediate effect from 30 October 2024.

Capital gains tax rates for Business Asset Disposal Relief and Investors’ Relief will rise gradually from 10% to 14% from April 2025 and match the main lower rate of 18% from April 2026, to allow business owners time to adjust to the changes.

Non-dom tax status will be abolished from April 2025, replaced by a residence-based regime.

Property

The Higher Rates for Additional Dwellings in Stamp Duty Land Tax on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property, will increase from 3% to 5% with immediate effect from 31 October 2024.

Inheritance tax

The current inheritance tax thresholds will remain frozen until April 2030.

Agricultural property relief and business property relief will be reformed from April 2026. The 100% rate of relief will continue for the first £1 million of combined agricultural and business assets to help protect family farms and businesses, and will be 50% thereafter.

As a result of the changes to the High Income Child Benefit Charge (HICBC) announced in the Spring Budget, some individuals may need to review whether they should restart their Child Benefit claims from April 2024.

Previously, the HICBC affected anyone where they or their partner had adjusted net income in excess of £50,000 and they or their partner were in receipt of Child Benefit. But from 6 April 2024, this threshold has now been raised to £60,000 along with a change to the rate of clawback.

If either partner has adjusted net income above £60,000, the HICBC requires the highest earner in the relationship to repay any Child Benefit received in the tax year at the rate of 1% for every £200 of net income in excess of £60,000. This means that all the Child Benefit is repaid if the highest earner’s income is £80,000 or more.

However, previously the rate of clawback was 1% for every £100 of net income in excess of £50,000 which meant that all the Child Benefit was repaid if the highest earner’s income was only £60,000 or more.

As a result of these changes, many eligible parents may now need to consider if they should restart their Child Benefit claims if they had previously stopped them. If this applies to you, an online claim form can be submitted on HMRC’s website here.

Today the Chancellor delivered his Spring Budget, most of which had already been announced in the Press. Below is a summary of some of the main points of interest, but the full statement can be found here.

National Insurance Cuts

Following on from the previous cuts in January, and to further level up the tax system for workers, Employee National Insurance Contributions will reduce from 10% to 8% from April. The self employed will also see a similar cut from 8% to 6%.

VAT

Having been frozen for a long time now, the VAT registration threshold will increase from £85,000 to £90,000 from April.

Child Benefit Charge

From April 2024, the high income child benefit charge will now start at £60,000 (instead of £50,000), and the rate at which it’s charged will halve, with the full taper now only taking effect at £80,000 (instead of £60,000). Longer term, the charge is to be moved to be based on household income from April 2026.

Property Taxes

In a bid to free up more housing, the beneficial reliefs currently available for holiday lets will be abolished from April 2025. And to encourage more landlords to sell their properties, the higher rate of property Capital Gains Tax will be reduced from 28% to 24%.

ISA’s

A new British ISA, will allow an additional £5,000 allowance for investment in British equities.

Today the Chancellor, delivered his Autumn Statement, which as a result of the drop in inflation, tax cuts were the main topic of discussion. Below is a summary of some of the main points of interest, but the full statement can be found here.

National Insurance Cuts

Employee National Insurance is to be cut by 2% to 10% with effect from 6 January 2024.

Class 4 National Insurance for self employed will be cut by 1% to 8% from April 2024.

And Class 2 National Insurance, also paid by self employed, is to be abolished entirely, although those who need to make voluntary contributions towards their state pension record, will still be able to do so.

National Living Wage

From April 2024, the National Living Wage will rise from £10.42 per hour to £11.44 per hour. This will now apply to anyone over the age of 21.

Business Rates

The small business multiple is to be frozen for another year, and the 75% discount for retail, hospitality and leisure businesses is to be extended too.

Capital Allowances

Full expensing for capital expenditure will be made permanent, meaning companies will be able to get tax relief on the full cost of new plant and machinery in the year of purchase, in addition to the Annual Investment Allowance threshold.