Autumn Budget 2024: summary of implications for businesses and individuals

Businesses

One of the most striking features of the Autumn Budget was the rise in employer NICs by 1.2 percentage points to 15%, coupled with a reduction in the per-employee threshold from £9,100 per year to £5,000. The Chancellor hopes that this change will raise £25bn per year. Whilst the intention is for this increase to be borne solely by businesses, many are predicting that this cost will be passed on to employees in the form of lower pay increases and reduced employment opportunities. 

In an attempt to ensure the UK's regime remains competitive and provide some certainty and stability, the government have capped Corporation Tax at 25% for the duration of the current Parliament.

Sector specific measures

• Smaller businesses in the retail, hospitality and leisure (RHL) sectors will welcome the 40% relief on business rates liability (up to a cap of £110,000) and the lower multipliers for RHL properties in future years. 
• The energy sector has been targeted for tax rises, the Energy Profits Levy increased by 3% to 38% and the corresponding 29% investment allowance has been abolished.
• Retailers will be impacted by several increases relating to smoking products and soft drinks:
  • the tobacco duty escalator will increase at RPI plus 2% on all tobacco products
  • the rate on hand-rolling tobacco has been increased by a further 10%
  • a flat-rate excise duty on all vaping liquid will be introduced from 1 October 2026, at £2.20 per 10ml of vaping liquid
  • the Soft Drinks Industry Levy will increase over the next 5 years to reflect inflation.

• There were a series of environmental measures included in the Autumn Budget. For example: the government will increase Air Passenger Duty across the board with higher increases for business class passengers and private jets; the Climate Change Levy and Plastic Packaging Tax will increase in line with inflation; and a UK Carbon Border Adjustment Mechanism will be introduced on 1 January 2027, placing a carbon price on goods imported to the UK from the aluminium, cement, fertiliser, hydrogen, and iron and steel sectors.

Individuals

It will be welcome news to many that income tax allowances and thresholds will increase in line with inflation from 2028 (they remain frozen until then). However, this delayed increase may be overshadowed by several key changes which will have an immediate impact on households. As mentioned above, there is a real possibility that the rise in employer NICs to 15% will impact pay and employment opportunities for 'working people'.

The Chancellor has confirmed that the 'non-dom' regime will be abolished and the "outdated concept" of domicile will be removed from the UK tax system entirely from April 2025. The regime is to be  replaced by an "internationally competitive" residence-based regime which is intended to "close loopholes". It is claimed that the new regime will generate an additional £12.7bn in tax over the next five years. However, many are sceptical about this claim and predict an exodus of high-net worth individuals from the UK, taking their investments and businesses with them. The government also made the following key changes to the plan first proposed by the previous Conservative government:

• repatriation relief has been extended to three years
• non-UK assets held in trusts settled before 6 April 2025, will not be exempt from inheritance tax (IHT)
• the plan to provide a 50% tax reduction on foreign income received in tax year 2025/26, has been scrapped.

Investors will be significantly impacted by substantial increases to the rate at which Capital Gains Tax (CGT) will be charged. From 30 October 2024, the lower rate of CGT will increase from 10% to 18%, and the higher rate from 20% to 24%. Those who invest in property will also be hit with an increase in the higher rate of Stamp Duty Land Tax for additional dwellings, from 2% to 5%.

A key headline for entrepreneurs is that the lifetime limit for Business Asset Disposal Relief (BADR) will remain at £1m and the rate of relief is to remain at 10%. However, BADR rates will increase to 14% from 6 April 2025 and 18% from 6 April 2026.

There were several changes to IHT, which will need to be considered closely by those individuals affected by the changes:

• the nil-rate band (currently £325,000) will be frozen until 2030
• from April 2027, inherited pensions will be subject to IHT
• shares listed on the Alternative Investment Market will now only benefit from 50% IHT relief
• Agricultural Property Relief and Business Property Relief will be reformed from April 2026. Up to £1m of assets will benefit from 100% relief, but assets over that threshold will only benefit from 50% relief.

Approximately 7% of British people are privately educated and there are two upcoming changes that will affect this group. From 1 January 2025, private school fees will be subject to VAT at the standard rate of 20% and from April 2025 private schools will no longer be eligible for charitable rate relief. 

The government will freeze fuel duty rates for 2025-26 which will lead to a £59 annual saving for the average car driver. The temporary 5p cut in fuel duty will be extended by 12 months and the planned inflation increase will not take place.

HMRC

The Autumn Budget provides for an investment of £1.4bn over the next five years to recruit an additional 5,000 HMRC compliance staff. Whilst this will be welcome news to anyone involved in HMRC enquiries, more resources also need to be allocated to HMRC's training budget – it is no good having the staff if they are not sufficiently trained to carry out the work required of them.

Late payment interest rates have been increased by a further 1.5 percentage points, although it will be noted that there is no equivalent increase on the rate paid by HMRC on repayments of tax!