Planning & protection
Fairstone
The Autumn Budget 2024 introduces significant reforms to business and international tax policies, targeting areas such as Capital Gains Tax, business rates, and environmental compliance for corporations. These changes are designed to support economic stability, increase tax transparency, and incentivise sustainable practices among UK businesses. Explore how these updates may impact businesses and international tax obligations.
The lower and higher main rates of Capital Gains Tax will increase to 18% and 24% respectively for disposals made on or after 30 October 2024. The rate for Business Asset Disposal Relief and Investors’ Relief will increase to 14% from 6 April 2025, and will increase again to match the lower main rate at 18% from 6 April 2026. The new rates will be legislated in Finance Bill 2024/25.
The lifetime limit for Investors’ Relief will be reduced to £1 million for all qualifying disposals made on or after 30 October 2024, matching the lifetime limit for Business Asset Disposal Relief. This will be legislated in Finance Bill 2024/25.
The government will reform the way carried interest is taxed, ensuring that this is in line with the economic characteristics of the reward. From April 2026, all carried interest will be taxed within the Income Tax framework, with a 72.5% multiplier applied to qualifying carried interest that is brought within charge. As an interim step, the two Capital Gains Tax rates for carried interest will both increase to 32% from 6 April 2025. The government will also consult on introducing further conditions of access into the regime.
From 1 January 2025, to secure additional funding to help deliver the government’s commitments relating to education and young people, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20%. This will also apply to boarding services provided by private schools.
The government has published a response to its technical consultation on this policy. To protect pupils with special educational needs that can only be met in a private school, local authorities and devolved governments that fund these places will be compensated for the VAT they are charged on those pupils’ fees.
The government greatly values the contribution of our diplomatic staff and serving military personnel. The Continuity of Education Allowance (CEA) provides clearly defined financial support to ensure that the need for frequent mobility, which often involves an overseas posting, does not interfere with the education of their children.
Ahead of the VAT changes on 1 January, the MOD and the FCDO will increase the funding allocated to the CEA to account for the impact of any private school fee increases on the proportion of fees covered by the CEA in line with how the allowance normally operates. The MOD and FCDO will set out further details shortly.
As announced on 29 July 2024, private schools in England will no longer be eligible for charitable rate relief. The Ministry of Housing, Communities and Local Government (MHCLG) will bring forward primary legislation to amend the Local Government Finance Act 1988 to end relief eligibility for private schools. This change is intended to take effect from April 2025, subject to Parliamentary process. Private schools which are ‘wholly or mainly’ concerned with providing full-time education to pupils with an Education, Health and Care Plan will remain eligible for relief.
For 2025/26, eligible Retail, Hospitality and Leisure (RHL) properties in England will receive 40% relief on their business rates liability. RHL properties will be eligible to receive support up to a cash cap of £110,000 per business.
For 2025/26, the small business multiplier in England will be frozen at 49.9p. The government will lay secondary legislation to freeze the small business multiplier. The standard multiplier will be uprated by the September 2024 CPI rate to 55.5p.
The government intends to introduce permanently lower multipliers for Retail, Hospitality and Leisure (RHL) properties from 2026/27, paid for by a higher multiplier for properties with rateable values above £500,000.
A discussion paper has been published setting the direction of travel for transforming the business rates system and inviting industry to a dialogue about future reforms.
The Valuation Office Agency (VOA) is publishing a response to the March 2023 Consultation on Disclosure, which sets out the next steps on increasing the transparency of business rates valuations by disclosing more information.
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From 31 October 2024, the Higher Rates for Additional Dwellings (HRAD) surcharge on Stamp Duty Land Tax (SDLT) will be increased by 2 percentage points from 3% to 5%. Increasing HRAD ensures that those looking to move home, or purchase their first property, have a comparative advantage over second home buyers, landlords and businesses purchasing residential property.
This is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence. This surcharge is also paid by non-UK residents purchasing additional property.
The single rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 by corporate bodies will also be increased by 2 percentage points from 15% to 17%.
From 1 November 2024, the Energy Profits Levy (EPL) rate will rise by 3 percentage points to 38%, the investment allowance will be abolished and the rate of the decarbonisation allowance will be set at 66% so its cash value is maintained. To provide certainty and to support a stable energy transition, the government will make no additional changes to tax relief available within EPL. The levy will end on 31 March 2030. The government will legislate for these measures in Finance Bill 2024/25. To support long-term stability and predictability in the oil and gas fiscal regime, the government will publish a consultation in early 2025 on how the taxation of oil and gas profits will respond to price shocks after the EPL ends. The government will also continue to have regular engagement with the sector to understand the evolving context of oil and gas investment, supported by bi-annual fiscal forums.
The government will legislate in Finance Bill 2024/25 to provide relief for payments oil and gas companies make into decommissioning funds in relation to assets sold for use in Carbon Capture Usage and Storage, maintaining the tax treatment had these assets instead been decommissioned. This legislation will also remove receipts from the sale of these assets from the scope of the EPL.
The government is publishing a consultation on new environmental guidance for assessing end-use emissions related to oil and gas projects. This consultation seeks to provide stability for the oil and gas industry, support investment, protect jobs and ensure a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations.
The main rates of the Climate Change Levy (CCL) for gas, electricity and solid fuels will be uprated in line with Retail Price Index (RPI) in 2026/27. The main rate for liquefied petroleum gas will continue to be frozen. The reduced rates of CCL will remain at an unchanged fixed percentage of the main rates.
The government will maintain Carbon Price Support rates in Great Britain at a level equivalent to £18 per tonne of CO2 in 2026/27.
The government has published its response to the March 2024 consultation on the introduction of a UK carbon border adjustment mechanism (CBAM). The response confirms that the UK CBAM will be introduced on 1 January 2027, placing a carbon price on goods that are at risk of carbon leakage imported to the UK from the aluminium, cement, fertiliser, hydrogen and iron & steel sectors. Products from the glass and ceramics sectors will not be in scope of the UK CBAM from 2027 as previously proposed. The registration threshold will be set at £50,000, retaining over 99% of imported emissions within the scope of the CBAM, while removing over 80% of otherwise registrable businesses.
Over 70% of those removed from the CBAM altogether by this threshold are micro, small or medium-sized businesses.
For 2026/27, the government will increase rates of Air Passenger Duty (APD). This equates to £1 more for those taking domestic flights in economy class, £2 more for those flying to 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. From 2027/28 onwards, all rates will be uprated by forecast RPI and rounded to the nearest penny. The government is also consulting on extending the scope of the APD higher rate to capture all passengers travelling in private jets already within the APD regime.
The government will freeze fuel duty rates for 2025/26, a tax cut worth £3 billion over 2025/26 which represents a £59 saving for the average car driver. The temporary 5p cut in fuel duty rates will be extended by 12 months and will expire on 22 March 2026.
The planned inflation increase for 2025/26 will also not take place.
The government is setting rates for Company Car Tax (CCT) for 2028/2029 and 2029/30 to provide long-term certainty for taxpayers and industry. CCT rates will continue to strongly incentivise the take-up of electric vehicles, while rates for hybrid vehicles will be increased to align more closely with rates for internal combustion engine (ICE) vehicles, to focus support on electric vehicles.
The government will uprate standard Vehicle Excise Duty (VED) rates for cars, vans and motorcycles, excluding first-year rates for cars, in line with the RPI from 1 April 2025.
The government will change the VED First-Year Rates for new cars registered on or after 1 April 2025 to strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars.
These changes will apply from 1 April 2025.
The government recognises the disproportionate impact of the current VED Expensive Car Supplement threshold for those purchasing zero-emission cars and will consider raising the threshold for zero-emission cars only at a future fiscal event to make it easier to buy electric cars.
The government will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by CPI from 6 April 2025.
The government will support pubs and the wider on-trade by cutting alcohol duty rates on draught products below 8.5% alcohol by volume (ABV) by 1.7%, so that an average ABV strength pint will pay 1p less in duty. The government will also increase the discount provided to small producers for non-draught products, and maintain the cash discount provided to small producers for draught products, increasing the relative value of Small Producer Relief. Alcohol duty rates on non-draught alcoholic products will increase in line with RPI inflation. These measures will take effect from 1 February 2025.
The current temporary wine easement will also end as planned on 1 February 2025.
The government will consult on ways to ensure that small brewers can retain and expand their access to UK pubs, and maximise drinkers’ choice, including through provisions to enable more ‘guest beers’.
The government will consult with industry to improve the Spirit Drinks Verification Scheme (SDVS) and make an investment of up to £5 million to support the SDVS.
The Alcohol Duty Stamps Scheme will end following a review by HMRC. The government will introduce legislation in Finance Bill 2024/25 to end the Scheme from 1 May 2025.
To protect its real terms value, the Soft Drinks Industry Levy (SDIL) will be increased, over the next five years, to reflect the 27% CPI inflation between 2018 and 2024. Annual rate increases will occur on 1 April, starting on 1 April 2025, and will also reflect future yearly CPI increases.
To ensure the SDIL continues to encourage reformulation to help tackle obesity, the government will review the current SDIL sugar content thresholds and the current exemptions for milk-based and milk substitute drinks. Contributions from all interested stakeholders are welcomed as part of this review.
The government will renew the tobacco duty escalator at RPI+2% on all tobacco products until the end of this Parliament
To reduce the gap with cigarette duty, the rate on hand-rolling tobacco will increase by a further 10% this year. These changes will take effect from 6pm on 30 October 2024 and will be included in Finance Bill 2024/25.
A flat-rate excise duty on all vaping liquid will be introduced from 1 October 2026 at £2.20 per 10ml vaping liquid, accompanied by an equivalent one-off increase of £2.20 per 100 cigarettes / 50g of tobacco in tobacco duty to maintain the financial incentive to switch from tobacco to vaping.
The Gross Gaming Yield bandings for gaming duty will be frozen from 1 April 2025 until 31 March 2026.
From 1 April 2025, UK films with budgets under £15 million and a UK lead writer or director will be able to claim an enhanced 53% rate of Audio-Visual Expenditure Credit, known as the Independent Film Tax Credit. Expenditure incurred from after 1 April 2024 on films that began principal photography on or after 1 April 2024 is eligible. This measure was announced at Spring Budget 2024 and has been legislated.
From 1 April 2025, the rates of Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief will be set at 40% for non-touring productions and 45% for touring productions and all orchestra productions. These rates apply UK-wide. This measure was announced at Spring Budget 2024 and has been legislated.
The government will discuss widening the use of advance clearances in Research & Development reliefs with stakeholders, with the intention to consult on lead options in spring 2025. The government has also published a document setting out further information on the scale and characteristics of error and fraud up to 2023/24, the policy and operational changes that have been made to address this, and further data on customer experience.
The government will launch a consultation in spring 2025 to develop a new process that will give investors in major projects increased tax certainty in advance.
The government will extend for a further year the 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle chargepoints, to 31 March 2026 for Corporation Tax purposes and to 5 April 2026 for Income Tax purposes.
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