October budgets are rarely uneventful, and the 2024 budget didn’t disappoint as Labour try to find a difficult balance of spending cuts, growth and investment and raising revenue, whilst Manifesto promises remain freshly in mind. To help you to get your head around what this means, we have set out the key points below:
Inheritance Tax
Business Property Relief and Agricultural Property Relief restricted, Taxation of pension death benefits, Nil-rate bands continue to be frozen and the abolition of the non-dom regime.
Read more about changes to Inheritance Tax in our recent article by partner, Claire Martin, here.
Income Tax thresholds to remain frozen until April 2028
The Chancellor has reiterated the plans of the previous government to not raise income tax or employee national insurance contributions in 2028. Whilst this is welcome news for most, we should bear in mind that as salaries rise over the next few years more people will find themselves in the high rate band.
Employer National Insurance contributions
Whilst employees are protected in this budget employers are not so lucky with increases to national insurance contributions set to hit all but the smallest of businesses. The point at which they start making contributions will fall from £9,100 to £5,000 and the overall rate is increasing by 1.2% to 15%. This will leave many wondering if these additional costs will be passed on to the employee in the form of reduced bonus and lower pay rises next year.
Capital Gains Tax (CGT) increases
It has come as a surprise to few that CGT has gone back up from 10% to 18% for lower rate disposals and the higher rate from 20% to 24%. This is for sale of non-residential property which is already higher.
Those looking to sell or gift their business will also need to take note that the lifetime limit for Business Asset Disposal Relief is staying at £1million and the tax rate is going up to 14% in April 2025 and 18% in April 2026.
Stamp Duty Land Tax (SDLT) on second properties
Those looking to buy an investment property, or second home should be aware that from mid-night last night the rate of SDLT has gone up from 3% to 5%. This has returned things to a more “pre-pandemic” level but will still leave some reconsidering investment plans.
Pension contributions allowances unchanged
It will come a relief to many that no changes have been made to the tax-free limits on pension contributions.
Draught beer duty cut, but wine, spirits and soft drinks prices to rise
Whilst a 1.7% cut in draft beer duty from February will be a welcome relief to the pub industry and its customers, the duties on “non-draught” drinks like wine and spirits will rise in line with the inflation.
How can Hanne & Co help?
The 2024 budget has quietly ramped up the pressure on families, property owners, and business owners. For clients who have spent a lifetime building their wealth, there’s now more reason than ever to plan for how it’s passed on. At the end of the day, every family’s needs are unique, and there’s no one-size-fits-all approach to IHT planning. This is where private client lawyers really come into their own – helping you make sense of what these changes mean for you personally and ensuring you’re not caught off-guard.
If the October 2024 budget has left you with questions about your estate, let’s talk. This IHT freeze may be stealthy, but it’s not unbeatable!
If you have any questions on any of the above do not hesitate to contact our Private Client team on +44 (0) 207 228 0017 or via the form below.
Contact our property team today to discuss any of the above in more detail by submitting the form below.
"*" indicates required fields
