The Autumn Budget 2024 was a Budget of some big numbers …..a total of £40 billion increase in taxes and, on the other side, an announcement of a £22.6 billion increase in the “day-to-day health budget” aimed at bringing down NHS waiting lists and increasing capacity.
So, what were the main changes that will affect the Healthcare sector?
Employer’s National Insurance
Of the £40 billion announced increase in tax revenue, £25 billion is expected to come from the changes to Employers’ National Insurance.
From April 2025, Employer National Insurance contributions will increase by 1.2 % to 15%. The employee salary level at which employers start paying the contributions will decrease from the current £9,100 to £5,000. These measures combined are likely to significantly increase the wage bill for many employers.
GP practices and NHS dental practices, in particular, are expected to be quite badly affected by this measure. They are not being given the same support as NHS Trusts or other organisations in the Public Sector, and they are not able to take advantage of the increase in the Employment Allowance from £5,000 to £10,500, as this is not available for businesses with more than 50% NHS income. At the time of writing, the BMA, BDA and other organisations are lobbying the Treasury on this point.
Increased National Living Wage
Employers may also be affected by the increase in the National Living wage from April 2025, which will increase by 6.7% to £12.21 per hour.
For workers aged 18-20, the National Minimum Wage will increase 16.3% to £10 per hour.
Inheritance Tax – Pensions
The Budget announced that, for deaths on or after 6 April 2027, unspent pension funds and death benefits will be included in an individual’s estate for IHT purposes unless left wholly to a spouse. Currently, pension assets are outside of IHT, so this could significantly impact the expected IHT liability.
This measure is the subject of a consultation, and full details are not yet known, particularly how it will affect Defined Benefit pension schemes, such as the NHS scheme. The indications, at the moment, are that the main effect of such schemes will be for lump sum death benefits unless the spouse is the beneficiary, but further information is awaited.
Inheritance Tax – Business Property
Business property, such as an interest in a partnership, is currently exempt from IHT due to Business Property Relief (“BPR”)
For deaths on or after 6 April 2026, this 100% relief will be restricted to the first £1m of qualifying assets, with the rate reduced to 50% for amounts in excess of that, giving an effective IHT rate of 20% on these assets.
The rate of BPR, which applies to shares and securities not listed on a recognised stock exchange, such as those listed on AIM, will also reduce from 100% to 50% from April 2026.
Capital Gains Tax
From Budget Day, 30th October, the main rates of CGT that apply to assets other than residential property increased from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. This aligns the main rates of CGT with those already payable on residential property, to which there was no change.
Business Asset Disposal Relief (“BADR”) was retained with the current £1m lifetime limit, but the current 10% tax rate will only apply for the remainder of this tax year. The rate will then increase to 14% for disposals made on or after 6 April 2025 and to 18% for disposals made on or after 6 April 2026. The BADR tax rate generally applies where, for example, an interest in a GP surgery is sold within 3 years of leaving the practice or a dental practice is sold.
Income Tax
The freeze on income tax thresholds will end in April 2028, after which the thresholds will once again increase in line with inflation.
Domicile
The “non-dom” status will be abolished from 6 April 2025, transitioning to a residence-based tax regime. This new system will require UK residents to pay taxes on worldwide income, removing the previous remittance basis of taxation.
It will also mean that an individual’s obligation to pay IHT will be based on their tax residence as opposed to their domicile status (which is broadly determined by where they were born).
There is expected to be some relaxation written into the rules for those who are only temporarily resident in the UK. Full details are awaited.
SDLT
From the 31st October, the day after Budget Day, the additional SDLT payable when purchasing additional dwellings increased from 3% to 5%. This will impact second homes, buy-to-let properties, and company residential property purchases.
Spending on the NHS
There was a Budget announcement that the Department of Health and Social Care will receive £22.6 billion more in 2025-26 compared to 2023-24 and a £3.1 billion increase in NHS capital spending aimed at modernising facilities. This includes £1.5 billion for new surgical hubs and diagnostic facilities.
The Budget is likely to have a wide-ranging impact on those working in the Healthcare sector. If you would like to discuss further how the announcements may affect your finances, please contact your usual BHP contact.
