Following the Autumn Budget announcement, here is a brief overview of the key changes and how they may impact your financial future.
Personal Taxes & Legacy Planning
- Income Tax Thresholds: Income tax and National Insurance thresholds will rise with inflation from 2028-29, protecting taxpayers from bracket creep.
- Capital Gains Tax (CGT): Main CGT rates increase to 18% (lower) and 24% (higher). No increase for sales of second homes.
- Inheritance Tax (IHT): IHT threshold freeze extended to 2030. Pension pots will be taxed upon inheritance from 2027.
- AIM Portfolio Tax Change: Currently, 100% of the value of an AIM portfolio is exempt from inheritance tax through Business Property Relief (BPR). Under new rules, AIM portfolios will be subject to IHT at a reduced rate of 20%, rather than the standard 40%.
- Business & Agricultural Relief: Assets above £1 million will incur a 20% IHT, while those under retain full relief.
Savings & Investments
- VAT on Private School Fees: VAT applied to private school fees beginning January 2025.
Business Owners
- Employment Allowance: Raised from £5,000 to £10,500, reducing National Insurance for smaller businesses.
- Minimum Wage Increase: National Living Wage raised by 6.7% to £12.21 per hour, benefiting full-time workers with £1,400 annually.
Pensions
- Pension Tax Changes: From 2027, inherited pensions will count toward estate tax.
- State Pension: CPI indexation confirmed, preserving purchasing power amid rising costs.
- Electric Vehicles: Ongoing incentives for electric company cars until 2030 to support eco-friendly pension investments.
National Insurance
- Employer Contributions: Increase from 13.8% to 15% starting April 2025.
- Secondary Threshold: Lowered from £9,100 to £5,000, raising £25 billion annually by forecast period’s end.
- Employee NI: Rates unchanged to avoid additional burden on workers.
The Economy
- Inflation Target: Bank of England’s 2% target retained. Inflation expected to average 2.5% in 2024, dipping to 2% by 2029.
- GDP Growth: Forecasted growth rate of 1.1% in 2024, gradually stabilising around 1.5-2% over the next decade.
- Public Investment: New £5bn investment in housing; £1bn in aerospace, £2bn in electric vehicle support, £500m for life sciences.
Additional Key Measures
- Fuel Duty Freeze: One-year freeze extension; maintaining the previous 5p cut.
- Tobacco & Alcohol Taxes: Vape tax introduced; tobacco and alcohol taxes increase per RPI, with a cut in draught duty.
We’re here to guide you through these updates and any others that may arise.