Autumn Budget 2024 Decoded: Key Changes & Updates to Know

The Autumn Budget 2024 introduced significant changes impacting businesses, individuals, and the accounting profession in the UK. For accounting firms, staying on top of these changes is essential for guiding clients effectively through new tax rules, adjusted allowances, and updated corporate obligations.

From personal tax adjustments and revised employer contributions to shifts in inheritance tax and capital gains, the budget reshapes financial planning strategies, impacting clients across various sectors.

Autumn Budget 2024 Key Highlights

The Autumn Budget’s new measures reflect a strong emphasis on taxation, employment costs, and business incentives aimed at economic stability and equitable growth. Let’s explore these in detail across various sectors:

Personal Tax

Income Tax: Income tax rates remain unchanged, offering stability for taxpayers. However, starting from April 2028, personal tax thresholds will be adjusted with inflation, which will affect both income tax bands and thresholds in future years.
National Insurance: From 2025/26, key thresholds for NI contributions will be adjusted, with the Lower Earnings Limit set at £6,500 and the Small Profits threshold at £6,845. Additionally, the main Class 2 NI rate will be £3.50 per week, while Class 3 contributions will rise to £17.75 per week.
Non-Domicile Regime: The abolition of the non-domicile regime, effective April 2025, will impact those with foreign income, particularly affecting UK residents with offshore earnings who currently benefit from tax exemptions.
High-Income Child Benefit Charge: A proposal to base the charge on household income has been shelved, keeping the current individual income-based system intact.

Implications: Accounting firms may need to support clients in restructuring finances in light of the abolition of the non-domicile regime while adjusting plans to accommodate rising NI thresholds and the inflation-based personal tax thresholds set for 2028.

Employment

National Insurance Contributions (NICs): From April 2025, Employers’ Class 1 NIC rate will rise from 13.8% to 15.0%, and the threshold at which employers start to pay NIC will drop from £9,100 to £5,000. This represents a significant cost increase for employers across all sectors.
Employment Allowance: To offset rising NICs, the Employment Allowance is doubling to £10,000, allowing more small businesses to reduce their NIC bills. The eligibility cap of £100,000 turnover has been removed, widening accessibility.
Minimum Wage Increase: The National Minimum Wage (NMW) will be £12.21 per hour from April 2025, with younger workers (18-20 years) also seeing an increase to £10 per hour.

Implications: Employers will experience higher staffing costs due to increased NIC rates and a higher NMW, and accounting firms should prepare to help clients adjust payroll processes. The increased Employment Allowance may be advantageous for small and medium-sized clients looking to mitigate their tax burden.

Business Taxation

First-Year Allowances Extension: The 100% first-year allowance on zero-emission cars and qualifying machinery is extended until March 2026, encouraging green investments by reducing initial capital expenditure for businesses.
Corporate Tax Roadmap: The government has committed to capping corporation tax at 25% and maintaining existing tax reliefs and the Small Profits Rate, ensuring stability for corporate tax planning.
Business Rates Relief: Eligible retail, hospitality, and leisure businesses in England will receive 40% business rates relief in 2025/26. The small business multiplier freeze for 2025/26 aims to ease operational costs.

Implications: These changes offer opportunities for tax savings, particularly for businesses investing in green initiatives. Accounting firms can leverage these incentives to advise clients on tax-efficient capital investments.

Capital Gains Tax (CGT)

Increased CGT Rates on Non-Residential Assets: For disposals on or after October 2024, CGT on non-residential assets will increase, with lower rates moving from 10% to 18% and higher rates from 20% to 24%.
Business Asset Disposal Relief: Starting from April 2025, CGT on qualifying assets will gradually increase from 10% to 14%, moving further to 18% in April 2026.
Carried Interest: From April 2025, carried interest CGT rates will rise to 32%, and from April 2026, carried interest will be taxed as income.

Implications: Clients involved in asset disposal and investment will face a higher tax burden, particularly in the real estate and investment sectors. Accounting firms should provide proactive advice to clients considering disposals before these rates rise and re-evaluate long-term tax strategies.

Additional Measures

Stamp Duty Land Tax (SDLT): From October 2024, higher SDLT rates on additional property purchases will rise from 3% to 5%.
VAT on Private Schools: Effective January 2025, private schools will face 20% VAT and lose charitable rate relief on business rates from April 2025.
Late Payment Interest: From April 2025, HMRC’s late payment interest rate will increase by 1.5%, potentially increasing the penalty for late tax payments.

Implications: The increased SDLT rate could cool down the buy-to-let market, while VAT on private schools will raise costs for parents and affect budgeting for private education. Higher interest rates on tax liabilities emphasize the need for timely tax planning.

Summing Up

The Autumn Budget 2024 introduces sweeping changes that will demand careful financial adjustments from businesses and individuals alike.

Accounting firms should prepare to guide clients through new and rising taxes, help optimise tax relief opportunities and adjust payroll systems for higher employment costs.

By staying informed about these changes, firms can ensure that clients’ financial strategies remain robust and compliant with evolving economic policies.

Need help with your core tasks while you focus on clients? QX can help! Call us at +44 208 146 0808 or email us at [email protected] to learn how we can support your firm.

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Pooja Kshirsagar

With a rich experience of curating content for various industries, Pooja believes in the power of words in marketing and building brands. She enjoys experimenting with different forms of content and is currently on a mission to add value to the accounting industry through her detailed and researched write-ups.

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Originally published Nov 11, 2024 03:11:30, updated Nov 11 2024

Topics: Autumn Budget 2024, Autumn Statement