Overview
On 30 October 2024, Chancellor Rachel Reeves delivered the Autumn Budget — the first Labour Budget in 14 years. It contained some of the most significant tax changes in recent memory. Here is what business owners and individuals need to know.
Employer National Insurance — The Biggest Change
The headline announcement for businesses was a significant increase in Employer National Insurance Contributions (NICs):
- Employer NIC rate increased from 13.8% to 15%
- The secondary threshold (the level at which employers start paying NIC) reduced from £9,100 to £5,000
- Both changes take effect from 6 April 2025
For a typical small business with 5 employees on average salaries, this could increase payroll costs by thousands of pounds per year. However, the Employment Allowance was increased from £5,000 to £10,500, partially offsetting the impact for smaller employers.
Capital Gains Tax Increases
CGT rates for most assets were increased with immediate effect from 30 October 2024:
- Basic rate: 18% (up from 10%)
- Higher/additional rate: 24% (up from 20%)
Residential property CGT rates were already 18%/24% and were not changed. The Business Asset Disposal Relief rate increases from 10% to 14% in April 2025 and 18% in April 2026.
National Living Wage
The National Living Wage increased to £12.21 per hour from April 2025, up from £11.44. The National Minimum Wage for 18–20 year olds also rose significantly to £10.00.
Inheritance Tax
Current IHT thresholds are frozen until at least 2030. A major change announced was that unspent pension pots will be included in the estate for IHT purposes from April 2027. This will significantly impact many existing pension planning strategies.
Agricultural Property Relief (APR) and Business Property Relief (BPR) will be reformed — from April 2026, claims above £1 million will only attract 50% relief (an effective 20% IHT rate).
Stamp Duty Land Tax (SDLT)
The higher rates surcharge on additional dwellings increased from 3% to 5% with immediate effect from 31 October 2024. This affects second home buyers and buy-to-let investors.
Income Tax Thresholds
Income tax thresholds remain frozen until 2028. No changes were made to rates. The freeze continues to create "fiscal drag" as rising wages push more taxpayers into higher bands.
Making Tax Digital
The Budget confirmed the timetable for MTD for ITSA — mandatory from April 2026 for those with income over £50,000. Read our full MTD for ITSA guide for more details.
What Should You Do?
- Review your salary and dividend structure before April 2025
- Consider accelerating pension contributions to reduce IHT exposure
- Review your property investment strategy in light of SDLT and CGT changes
- Prepare for increased payroll costs and review your pricing and margins
These changes are complex and the right strategy will depend on your individual circumstances. Contact Ascot Accountancy to discuss what the Budget means for you.