The Chancellor, Rachel Reeves, delivered her first Budget on Wednesday 30 October.
“Materially different.” This was a phrase repeated several times during today’s Budget speech, and it could have referred to a lot of things – the first Labour majority government in 14 years, and the first Budget ever delivered by a female Chancellor of the Exchequer. But what Rachel Reeves was referring to was the Office of Budget Responsibility’s report, which stated that its March 2024 economic forecasts would have been materially different if it had been told by the previous government about “undisclosed spending pressures”. In the run up to the Budget, Reeves had been frank about the need to make difficult decisions in relation to tax, welfare and spending decisions.
The largest tax increases fall on the shoulders of businesses
The Budget, subtitled ‘Fixing the Foundations to Deliver Change’, aims to raise around £40 billion in additional revenue for the government, while aiming to support working people by not increasing the basic, higher or additional rates of income tax, National Insurance contributions (NICs) or VAT. This means, therefore, that the largest tax increases have fallen on the shoulders of businesses – the lion’s share of this amount is expected to be raised with the increase in rate of employer NICs to 15% and the cut in the Secondary Threshold to £5,000.
However, there was welcome news with the confirmation that the rate of corporation tax will be held at 25% for the rest of this Parliament. Further, the release of a corporation tax roadmap, setting out the government’s plans in this area, aims to give certainty and confidence to encourage growth – including maintaining permanent full expensing and the £1 million annual investment allowance, maintaining Research & Development tax reliefs, and developing a new advance tax certainty process for major investments.
Tax increases for wealthy individuals
There will also be increases in taxes for the wealthiest individuals. As previously announced, the government will move ahead with changes to the taxation of non-doms – abolishing the remittance basis of taxation and replacing it with a regime based on residence.
Rates of capital gains tax will also increase, with an increase in the main rates from 10% and 20% to 18% and 24% respectively, as of 30 October 2024 (Budget day). Those owning more than one home will also face increases in the rate of SDLT they have to pay. And, as has been widely publicised, private school fees will be subject to VAT from January 2025, increasing the overall cost to parents.
As had been predicted, there have also been changes announced to inheritance tax (IHT). While the nil rate and residence nil rate bands will remain unchanged, Agricultural Property Relief (APR) and Business Property Relief (BPR) will be reformed from 6 April 2026. 100% relief will continue to be available for the first £1 million of agricultural and business property, with 50% relief applying to amounts above this. In addition, unused pension funds and death benefits payable from a pension will be brought into a person’s death estate for IHT purposes from 6 April 2027.
Overall, the Chancellor’s first Budget has been, as was expected, a tax-raising Budget. However, there are certainly winners and losers – and the effects of these changes will remain to be seen once they come into force.
Autumn Budget 2024: At a glance
You can read our overview of the key announcements made by the Chancellor, covering changes to capital gains tax, inheritance tax, SDLT, Employers’ National Insurance and the remittance basis of taxation for non-domiciled individuals.
Autumn Budget 2024 – for businesses
We examine the key tax changes impacting businesses announced by the Chancellor Rachel Reeves in the 2024 Autumn Budget.
Autumn Budget 2024 – for individuals
We examine the changes impacting individuals announced in the 2024 Autumn Budget.
Budget changes for non-doms
The government has announced that from 6 April 2025 the remittance basis regime will be abolished and replaced with a new residence-based regime.
Autumn Budget 2024 Webinar
In this webinar, Adam Kay examines the announcement from Chancellor, Rachel Reeves’ first budget, and the implications for individuals and businesses.
