Key Tax Changes and New Measures in the Autumn Budget 2024

Unlocking tax efficiency and maximising revenue potential

The Autumn Budget 2024 introduces an extensive range of reforms designed to enhance tax efficiency and economic resilience. From the increase in employer National Insurance Contributions (NICs) to updated Capital Gains and Inheritance Tax policies, these measures have significant implications for both individuals and businesses.

Here’s a closer look at some of the key changes shaping the UK tax landscape.

Key changes in employer National Insurance contributions (NICs)

Starting from 6 April 2025, the employer NICs rate will increase from 13.8% to 15%, with the Secondary Threshold—the point at which employers begin to pay NICs on employees’ earnings—reduced from £9,100 to £5,000. This change, applicable until 6 April 2028, aims to increase tax revenues, after which the threshold will adjust in line with the Consumer Price Index (CPI).

To alleviate the impact on smaller employers, the Employment Allowance will rise from £5,000 to £10,500, with the government removing the £100,000 eligibility threshold, broadening the allowance to include all eligible employers starting in April 2025. Additionally, NICs relief for hiring veterans has been extended for an additional year, providing employer NICs exemptions up to £50,270 for veterans’ first year of civilian employment.

Revisions to non-UK domicile taxation

The remittance basis of taxation for non-UK domiciled individuals will be replaced by a residence-based regime from 6 April 2025, allowing foreign income and gains (FIG) to be excluded from UK taxation for the initial four years of residence. For Inheritance Tax (IHT) purposes, the use of offshore trusts to avoid IHT will be phased out, and the rules for Capital Gains Tax (CGT) will allow current and past remittance basis users to rebase foreign assets to their 2017 values upon disposal, under certain conditions.

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Updates to Inheritance Tax (IHT) policies

The government is also reforming inheritance tax rules:

• Unused Pension Funds and Death Benefits: From 6 April 2027, unused pension funds and death benefits will be included in an individual’s estate for IHT purposes, closing a loophole that had allowed pensions to be used for capital accumulation.
• Agricultural and Business Property Relief: From 6 April 2026, the first £1 million of agricultural or business property will remain eligible for the current 100% IHT relief, with subsequent property receiving a 50% relief rate.
• Extended Agricultural Property Relief: Property managed under environmental agreements will also qualify for IHT relief, encouraging environmentally sustainable land use.

The IHT nil rate bands will remain frozen at £325,000 and £175,000 (for the residence nil rate band) until 2030, allowing estates to pass on up to £500,000 tax-free, or up to £1 million for estates of surviving spouses or civil partners.

Other tax adjustments and allowances

1. Qualifying Care Relief and Married Couple’s and Blind Person’s Allowances will be increased by the CPI rate of 1.7% in 2025/26.
2. Individual Savings Accounts (ISAs): Annual ISA limits will be maintained at £20,000 for ISAs, £4,000 for Lifetime ISAs, and £9,000 for Junior ISAs until 2030.
3. Help to Save: This scheme, which assists low-income earners in building savings, has been extended until April 2027, with eligibility expanded to all Universal Credit claimants in work beginning in April 2025.
4. Starting Rate for Savings: Retained at £5,000 in 2025/26, allowing individuals with income under £17,570 to save without paying tax on the first £5,000 in interest.

Additional policy updates

• British ISA: Plans to introduce a British ISA were shelved following mixed feedback during consultations.
• Neonatal Care Pay Tax Status: The government will legislate to confirm the tax treatment of Statutory Neonatal Care Pay, ensuring its consistency with other statutory maternity and paternity schemes.
• Loan Charge Review: An independent review of the Loan Charge will be conducted to address unresolved issues and ensure fairness in taxpayer treatment.

Through these comprehensive reforms, the government aims to create a fairer, more efficient tax system that supports economic stability and enhances public funding.

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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.