Rachel Reeves, Britain’s first female Chancellor, has just sat down from delivering her maiden Budget. This is Labour’s first Budget for 14 years since coming into power in July 2024. Based on her speech and ending months of speculation, some of the most significant tax changes announced were as follows:
Employment Tax Measures
- Employers National Insurance will increase from 13.8% to 15% from 6 April 2025;
- There will be a reduction in the threshold for the payment of Employers National Insurance from £9,100 per annum to £5,000 per annum from 6 April 2025;
- There are no changes to Employees National Insurance rates;
- The Employment Allowance will be increased from £5,000 to £10,500 in 2025/26;
- National Living Wage is set to increase to £12.21 per hour from April 2025;
- National Minimum Wage is set to increase to £10.00 per hour, for 18 to 20 year olds from April 2025.
Inheritance Tax (IHT)
- The IHT Nil rate band remains frozen at £325,000 until 2030,
- The IHT Residential Nil Rate band at £175,000 will also remain frozen until 2030;
- Claims for 100% Agricultural Property Relief and Business Property Relief (BPR) will be restricted to a combined allowance of £1m, and 50% relief will be available thereafter;
- The above change will affect any interest in a business or farm worth more than £1m combined;
- 100% BPR for shares on the Alternative Investment Market will be reduced to 50%;
- Personal pension funds will be subject to IHT from April 2027.
Capital Gains Tax (CGT)
- The 10% and 20% rates of CGT are to be increased to 18% and 24% from today;
- The 18% and 24% rates on Residential Property will remain unchanged;
- The lifetime allowance for Business Asset Disposal Relief (BADR) will remain at £1m;
- The rate of tax under BADR will increase from 10% to 14% from April 2025 and from 14% to 18% from April 2026.
Other measures
- The additional Stamp Duty Land tax on the purchase of second properties will be increased from a rate of 3% to 5%, with effect from 31 October 2024;
- The Non UK Domicile Regime will be abolished from April 2025 with the introduction of a new residency based scheme;
- VAT on private school fees will be introduced in January 2025;
- Business rates relief for private schools will be removed from April 2025;
- There are planned increases on the interest charged on unpaid tax;
- There will be a freeze on fuel duty.
As normal these are just some of the key points from the Chancellor’s speech. Further details of these, and other measures not referred to in the speech, will be reported in Muras Matters over forthcoming weeks.
If you would like to discuss how any of these changes may affect you please contact our Tax Director, Jenny Marks.
To see our other news items please visit our Muras Baker Jones – Blog.