Autumn Budget 2024 – Main tax announcements

This blog discusses some of the key tax changes announced in last week's Autumn Budget 2024.

The Chancellor, Rachel Reeves, delivered the Autumn Budget 2024 on Wednesday 30th October. In doing so, she made the first set of Budget announcements by a Labour Government since 2010. This year's Budget was one of the most eagerly awaited for some time. In terms of the breadth of announcements, it did not disappoint.

Some of the measures announced had been well-trailed. Speculation had been intense regarding increases in the rates of employer's National Insurance (NICs) and capital gains tax (CGT).

The main tax announcements made by the Chancellor are summarised below. 

Corporate taxes

1. Employer NICs: With effect from 6 April 2025, the Government will increase the rate of secondary Class 1 employer NICs from 13.8% to 15%. 

In addition, the threshold at which employer NICs become payable is being lowered, from the same date (from earnings above £9,100, to earnings above £5,000, per year).

2. Corporation tax rate: As expected, the Government announced a 25% cap on the main rate of corporation tax for the duration of this Parliament.

3. Corporate tax roadmap: Alongside the Autumn Budget, the Government published a "Corporate Tax Roadmap", as part of the commitment to set out scheduled changes to business taxes for the life of this Parliament. As well as the commitment to maintaining the main corporation tax rate, the roadmap includes proposals to consult on the transfer pricing, permanent establishment and Diverted Profits Tax regimes. The potential removal of UK-UK transfer pricing is specifically mentioned.

4. Pillar 2 Rules: The Government plans to introduce the undertaxed profit rule (UTPR) as the final rule of Pillar 2, an international agreement between over 135 countries aimed at tackling profit-shifting and vigorous tax planning by large multinational corporates. The UTPR, being part of the two-pillar solution developed by the OECD to reform the international tax framework, brings a share of top-up taxes not paid in another jurisdiction into the charge to UK tax, with a view to meeting the objective of a minimum effective rate of tax of 15%. The UTPR will take effect for accounting periods beginning on or after 31 December 2024.

Personal taxes 

5. Capital Gains Tax: For disposals made on or after 30 October 2024, the lower and higher 'main' rates of CGT have increased from 10% and 20%, to 18% and 24%, respectively. So-called 'anti-forestalling' rules apply, potentially, to unconditional contracts for the disposal of assets entered into before 30 October 2024.

The rate of CGT for Business Asset Disposal Relief (formerly Entrepreneur's Relief) and Investors’ Relief is increasing to 14% for disposals made on or after 6 April 2025, and to 18% for disposals made on or after 6 April 2026. The lifetime limit for Investors' Relief has fallen from £10m to £1m (with effect from 30th October 2024).

The rates of CGT for disposals of residential property have remained unchanged.

6. Carried interest taxation: From April 2026, the tax regime for carried interest will be within the income tax framework, with a 72.5% multiplier applied to qualifying carried interest that is brought into charge. 

As an interim step, the Government will introduce legislation in Finance Bill 2024-25 to increase the CGT rate for carried interest to 32% from 6 April 2025.

The taxation of carried interest had been an area much-discussed prior to the Budget announcements. The 2-stage process (a minor increase in the applicable CGT rate, from 28% to 32%, followed by a more radical change to take effect from April 2026) perhaps shows that the Government recognises the complexity of some of the issues relevant to this area of tax law. It is to be hoped that the time is used for a thorough consultation process. There will be relief within the private equity industry that the Government has not simply sought to align the taxation of carried interest with "ordinary" income tax rates.

7. Abolition of the Non-Dom tax regime: As widely expected, with effect from 6 April 2025, the remittance basis of taxation for non-UK domiciled individuals will be abolished and replaced with a residence-based regime under which opted-in individuals will not pay any UK tax on foreign income and gains for the first 4 years of UK tax residency. From year 5, foreign income and gains will be taxable in the usual way as for all UK resident individuals.

8. Pensions: From 6 April 2027, and subject to the results of a consultation period running to 22 January 2025, unused pension funds and lump sums payable on death will be brought within the scope of inheritance tax (IHT). The new IHT charge will apply to both defined contribution and defined benefit schemes.

9. IHT: From 6 April 2026, only the first £1m of qualifying business and agricultural property will benefit from the existing 100% IHT business property relief (BPR) and agricultural property relief (APR). Above the £1m threshold, the rate of these IHT reliefs will reduce to 50%.

For shares listed on AIM, the rate of IHT BPR will be reduced to 50%.

Property taxes

10. SDLT for additional dwellings: With effect from 31 October 2024, the higher rate of stamp duty land tax (SDLT) on so-called "additional dwellings" has increased from 3% to 5% above the standard residential SDLT rates. Also from 31st October 2024, the rate of SDLT applicable to purchases of "high value" (ie over £500k) residential property by corporate and other "non-natural" entities has increased from 15% to 17%.

11. Business rates: For 2025-26, eligible retail, hospitality and leisure properties in England will receive 40% relief on business rates liability and the small business multiplier will be frozen at 49.9p. Permanently lower business rates multipliers will be introduced from 2026-27.

Other announced measures

12. PISCES stamp duty exemption: The Government plans to introduce an exemption from stamp duty and stamp duty reserve tax for transactions on the Private Intermittent Securities and Capital Exchange System (PISCES), which is a new trading platform allowing private companies to have their shares traded intermittently.

13. Tax in the umbrella company market: With effect from April 2026, the Government plans to introduce legislation to make employment agencies responsible for accounting for PAYE and employer NICs on payments made to workers that are supplied via umbrella companies.

14. Liquidations of LLPs: The Government will introduce new legislation in the Finance Bill 2024-25 which will change the CGT rules which apply to the liquidations of LLPs. We await full details of the new legislation but it is clear that a perceived avoidance scheme is the focus of this measure.

15. Close Company Loans to shareholders: The Government will introduce new anti-avoidance measures in the Finance Bill 2024-25 to prohibit shareholders from extracting untaxed funds from close companies.

16. Taxation of EOTs and EBTs: The Government has published a policy paper and plans to introduce reforms to the taxation of Employee Ownership Trusts (EOTs) and Employee Benefit Trusts (EBTs). The planned changes will aim to prevent perceived abuse and to ensure that EOTs and EBTs are used to encourage employee ownership and reward. Changes will be made to the conditions for obtaining relief from CGT on disposals by shareholders to the trustees of an EOT.