The first UK Budget to be delivered by a female Chancellor was always going to be historic, but few budgets in recent years have perhaps been expected with such a sense of foreboding, even without the proximity to Halloween.
Following ten long weeks of talk of budget black holes, “fixing the foundations” and intense speculation of who’s shoulders the tax rises would fall upon, expectations of any positive news were low.
Announcing £40bn of tax rises is a bold move for any new Chancellor and employers in the private sector in particular will feel they have borne the brunt with an 1.2% increase in Employers National Insurance, alongside an increase to National Minimum Wage, increases to employees’ rights and potential changes to apprenticeships on the horizon. Business owners will also be impacted with widely trailed increases to Capital Gains Taxes and reforms to Inheritance Tax reliefs
The tax rises were balanced by an equally bold announcement of £100bn of investment over the next few years into rail, road, schools and the NHS as well as into funds such as the National Wealth Fund to support private businesses in certain sectors.
A corporate tax road map has set out some certainty around the taxation of businesses over the next few years by confirming that tax rates and reliefs won’t change, however the certainty provided may not be enough to boost any growth plans in the short to medium term.
While there were bold moves and significant investments on the table, the impact of tax increases will weigh heavily on many sectors. Whether our Chancellor has struck the right balance between raising funds and fostering economic growth remains to be seen.
Are these thirteen announcements unlucky for businesses? Further details will follow soon on our website:
- Employers NI to increases to 15% and be paid on earnings over £5,000 from April 2025
- Increases to the National Insurance Employment Allowance to £10,500 and ability to be claimed by all employers from April 2025
- Increase to National Minimum Wage for 18-20 year olds to £10 per hour and National Living Wage to £12.21 from April 2025
- Increase to Capital Gains Tax rates on commercial property and shares from 30 October 2024 to 18% and 24%
- Capital Gains tax rate on assets qualifying for Business Asset Disposal Relief (BADR) to increase to 14% in 25/26 and 18% in 26/27.
- Inheritance Tax Business Property & Agricultural Property Reliefs to be restricted to £1m from 2026, and assets above £1m to only receive 50% relief
- Withdrawal of Inheritance Tax relief on pension pots from April 2027
- Income Tax thresholds frozen until 2028
- The Non-Domiciled tax regime is to be abolished from April 2025, with a new residence scheme to be introduced. An extension to the temporary repatriation of funds relief was also announced.
- Stamp Duty Land Tax (SDLT) surcharge will rise from 3% to 5% on second homes and purchases of residential property by companies from 31 October 2024.
- The main rate of Corporation Tax to be maintained at 25% through to the end of this Parliament. Full Expensing and Annual Investment Allowance maintained at current rates. A corporation tax roadmap to be published today.
- Fuel duty is frozen until 25/26 representing a saving of around £59 for an average driver.
- The carried interest rate, which is payable on compensation received by general partners of private equity and hedge funds etc. is to increase to 32% from April 2025
To discuss how these wider changes may have an impact on your business please contact one of the team at BHP LLP.
