With the recent 2024 Budget announcement, significant tax adjustments and relief measures are coming into play that could impact businesses, property owners, and families alike. As your local accountant, we’re here to break down the essentials and help you understand what’s on the horizon and how it might affect your financial planning.
Here’s a closer look at the critical changes we at Giraffe Accountants think you need to know:
Employer National Insurance Contributions (NICs)
Starting April 2025, employers will see the main rate for Class 1 NICs rise from 13.8% to 15%, and the secondary threshold (the earnings level at which NICs start) will be reduced from £9,100 to £5,000. While this means higher contributions for employers, particularly those with larger payrolls, the government has also introduced an increase in the Employment Allowance from £5,000 to £10,500. This allowance, which reduces NICs for eligible smaller businesses, is intended to offset some of the added costs.
For employers, this means it’s time to reassess payroll costs and consider how these adjustments may affect your budgeting and staffing strategies in the coming years.
Capital Gains Tax (CGT)
Capital gains tax rates are set to increase immediately, impacting investors and business owners alike. Here’s how the changes look:
Current Rates: 10% for basic-rate taxpayers and 20% for higher-rate taxpayers.
New Rates: 18% for non- and basic-rate taxpayers and 24% for higher and additional-rate taxpayers.
These 2024 budget changes mean that those looking to sell assets or businesses will face a higher tax burden. Additionally, Business Asset Disposal Relief will see its rate rise to 14% in 2025/26 and 18% from 2026/27, affecting entrepreneurs looking to sell their business in the coming years. With these shifts, careful planning will be crucial to managing tax liabilities on significant disposals.
Property Taxes: Stamp Duty Land Tax (SDLT)
If you own or are planning to buy a second home or a buy-to-let property, the additional SDLT rate will increase from 3% to 5% from 31 October 2024. For those purchasing their first homes, the temporary 0% SDLT band will end on 31 March 2025, adding potential costs for future property transactions.
Tip for Property Owners: For those impacted by these rates, now is an excellent time to review property plans or consider purchasing decisions in light of these tax changes.
Inheritance Tax (IHT) Changes
Aiming to raise additional revenue, the Budget introduces notable changes to inheritance tax, particularly affecting those with business or agricultural assets. Starting April 2026:
IHT Relief Cap: Business and agricultural reliefs will be capped at £1 million. For estates exceeding this threshold, the tax relief will drop to 50%.
Pension Funds and Death Benefits: From April 2027, unused pension funds and death benefits will now be included in an individual’s estate for IHT purposes.
For high-value estates and business owners, these changes underscore the importance of proactive estate planning to navigate potential IHT burdens.
Education and VAT: New Tax for Private Schools
Families with children in private education should note the introduction of 20% VAT on private school fees starting January 2025. Additionally, charitable rate relief for business rates for schools will be withdrawn in April 2025. This significant shift could increase education costs for many households and may influence financial planning for families with school-aged children.
Corporate Tax Stability and R&D Support
In a bid to provide consistency for businesses, the government has outlined its Corporate Tax Roadmap, maintaining the main corporation tax rate at 25% for the foreseeable future. Key capital reliefs like full expensing for capital investment and R&D tax credits for SMEs will continue, providing stability and continued support for growing businesses. Plans are also underway to consult on simplifying these relief schemes by 2025, potentially making compliance and planning easier for businesses.
Business Rates Relief for Key Sectors
Retail, hospitality, and leisure businesses can benefit from a 40% relief cap in the 2025-26 fiscal year. A permanent reduction in business rates for these sectors is expected from 2026, offering smaller businesses some financial relief as they manage increasing operational costs.
Savings and ISA Limits Frozen
ISA, Junior ISA, and Lifetime ISA subscription limits will be frozen until 2030. For savers, this means current limits remain, so those looking to grow their savings may want to explore additional investment or savings vehicles beyond ISAs for long-term growth potential.
Banking Sector Taxes
The government’s commitment to reviewing the Bank Levy and Surcharge as part of balancing contributions and supporting growth remains in place. This ensures financial institutions have clear guidance on expected contributions, allowing them to plan effectively.
What’s Next following the 2024 Budget?
These updates represent some of the key changes for the upcoming years, and as always, Giraffe Accountants is here to help you understand what this means for you or your business. Whether it's managing NIC adjustments, navigating CGT changes, or preparing for the impact of higher SDLT rates, our team is ready to provide insights and strategies to keep your financial planning on track.
Need Support with an accountant near you?
Reach out to us for a consultation or to discuss how to optimise your tax strategy with these new changes in mind. Let’s make sure you’re fully prepared for the year ahead!
Let us know if you'd like a face to face appointment in Bognor Regis, West Sussex
🦒 Visit us at www.giraffeaccountants.co.uk