Key tax policy announcements from the UK Autumn Budget 2024

The Chancellor delivered the first Budget Statement of the new Labour Government on 30 October 2024, announcing an overall package of £40bn a year in tax increases and £74bn a year of additional spending by 2029/30.

Increased employer national contributions (NICs)
The single biggest tax increase in the Budget came from two changes to the rules on employer NICs. First, the rate of employer NICs was raised by 1.2 percentage points to 15%. Secondly, the point at which employers start to pay National Insurance was reduced from £9,100 per year to £5,000 per year.

The effect of these measures will mainly bite on larger employers as further changes will take smaller employers out of NICs altogether by increasing the Employment Allowance from £5,000 to £10,500 and removing the £100,000 threshold which applied to the allowance. Employer NICs reliefs will be maintained for freeports, investment zones, veterans, the under 21s and apprentices. 
The combined effect of these measures is estimated to raise an additional £25bn a year in tax by 2029/30.

No change to Corporation Tax
No major changes were made to Corporation Tax and in the context of launching a new Corporate Tax Road Map, the Chancellor confirmed her intention to keep the main rate at 25% while maintaining both the Small Profits Rate and marginal relief at current rates and thresholds. Similarly, features such as Full Expensing, the Annual Investment Allowance, R&D relief rates, and the Patent Box will remain in place.

Increased taxation of carried interest
Plans were announced to move the taxation of carried interest to bring it within Income Tax from 2026. As an interim measure the CGT rate for carried interest will be raised from 28% to 32% from April 2025.

Increased Capital Gains Tax (CGT)
The main rates of CGT were increased from 10% and 20% to 18% and 24% respectively. Taken together with changes to the Business Asset Disposal Relief (BADR) and Investors’ Relief (IR), which will rise to 14% from 6 April 2025 and to 18% from 6 April 2026, these measures will raise almost £2.5bn a year in additional tax.

Income tax thresholds unfrozen
The freeze on the income tax thresholds which was introduced by the previous government will not be extended. Therefore, from April 2028, these personal tax thresholds will return to being uprated in line with inflation.

Changes to Inheritance Tax
A range of changes to Inheritance Tax (IHT) were announced including: continuing the freezing of thresholds for a further two years to April 2030; reforming agricultural property relief and business property relief from April 2026 to restrict full relief to the first £1 million of combined agricultural and business assets, and restrict it to 50% above that threshold. Additionally, the rate of business property relief for shares designated as “not listed” on the markets of a recognised stock exchange, such as AIM, will be reduced to 50%; and unspent pension pots with be brought within IHT from April 2027.

Increased Energy Profit Levy (EPL)
The Energy Profits Levy will be increased by 3 percentage points to 38% from 1 November 2024 and end at a later date of March 2030 (although the Energy Security Investment Mechanism is being retained which allows for an earlier end date if oil and gas prices fall). In addition, the EPL investment allowance will be abolished and the rate of the investment allowance for decarbonisation expenditure will reduce to 66% keeping its cash tax value the same as it currently is. The government has committed to making no additional changes to reliefs within EPL.

A consultation is promised for early 2025 on how the taxation of oil and gas regime will respond to price shocks after the EPL ends in 2030.

Stamp Duty Land Tax (SDLT)
The SDLT higher rate surcharge on additional dwellings is to be increased from 3% to 5%. This is the rate which applies in addition to the main SDLT rates. It applies to the purchase of additional dwellings, and to the purchase of dwellings by non-individual purchasers. There has been a corresponding increase in the rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 by non-individuals – which rises from 15% to 17%. These measures have effect for transactions substantially performed on or after 31 October 2024.

Increase to Air Passenger Duty
Air Passenger Duty rates for 2026-27 rise by the equivalent of £1 for domestic flights in economy class, and £2 for short-haul destinations in economy class, £12 for long-haul destinations, and relatively more for premium economy and business class passengers. The higher rate, which currently applies to larger private jets will rise by a further 50% in 2026-27.

Confirmation on non doms and VAT on private schools
The Budget confirmed the intention to abolish the remittance basis for non-domiciled individuals and to move to a residence based regime with effect from 6 April 2025. The move to a residence basis will also extend to Inheritance Tax.

Similarly, it was confirmed that the standard VAT rate (20%) will be applied to private schools from 1 January 2025, and these schools will also lose their business rates charitable status from April 2025.

A range of smaller tax cuts

While this was overwhelmingly a tax-raising Budget, some measures did produce tax cuts. These included:

• Extending the freeze on fuel duty rates for 2024/25 and the temporary 5p cut will now expire on 22 March 2026
• Introducing a 40% relief on business rate for the Retail, Hospitality and Leisure sector, which will apply from 1 April 2025 when the current 75% discount lapses
• Small businesses will benefit from a freeze to the small business multiplier for 2025/26
  The duty on an average pint of draft beer will reduce by 1p.