The Chancellor has announced the 2024 budget – How will it impact you or your Business?
Tax rises:
- National Insurance employer contributions
- Capital gains tax
- Inheritance tax
- Air passenger duty
- Alcohol duty
- Tobacco duty
- Stamp duty
- Non-doms
Minimum wage increase
The Government will increase the National Living Wage to £12.21 an hour for over 21 year olds.
18-20 year olds will see an increase in the Minumum Wage to £10 per hour.
The system will also shift towards “a single adult rate” – phased in over time.
Income tax
No major changes have been announced regarding Income Tax.
The previous government froze income tax and National Insurance thresholds, the Chancellor says she will not extend this “stealth tax” further, meaning that from 2028-29, personal tax thresholds will be uprated in line with inflation again.
National Insurance
Employees have been spared a National Insurance increase but businesses are being asked to “contribute more”.
The Chancellor said employers will see their Employer NI contributions rise by 1.2 percentage points, to 15%, from April.
The threshold at which companies start to pay Employer National Inusrance on an employee’s salary, will decrease from £9,100 per year to £5,000.
The Employment Allowance will increase from £5,000 to £10,500.
The £100,000 limit at which the Employment Allowance becomes unavailable to Businesses will also be removed.
More than 865,000 small businesses will be exempt under changes to the employment allowance.
Corporation tax
Current rates of Corporation Tax remain, with a tapered 25% top rate of Corporation Tax and the Small Profits Rate and Marginal Relief will remain at their current rate and thresholds.
Current expensing reliefs will be maintained.
Capital gains tax
The lower rate of Capital Gains Tax will rise from 10% to 18%, while the higher rate will rise from 20% to 24%.
However, the rates on property would stay the same while the lifetime limit for business asset disposal relief while remain at £1m.
The rate of relief will remain at 10% this year before rising to 14% in 2025 and 18% in 2026.
The Carried Interest rate will rise to 32% in April 2025 and that further reforms will be confirmed in 2026.
Non-dom regime
The Non Dom-domicile tax regime will be abolished from April 2025 and replaced with a “new, residence based scheme” that is “internationally competitive”.
Inheritance tax
Ms Reeves says a freeze on inheritance tax thresholds will be extended by two years, to 2030.
This means the first £325,000 of any estate can be inherited tax-free, she says, rising to £500,000 if the estate includes a residence passed to direct descendants.
It also rises to £1m when a tax free allowance is passed to a surviving spouse or civil partner.
But she says inherited pensions will be brought into inheritance tax from April 2027 and that agricultural property relief and business property relief will be “reformed”.
From April 2026, the first £1m of combined business and agricultural assets will not incur inheritance tax but after that it will apply at an effective rate of 20pc.
State pension
Under the Government’s “triple lock”, which Labour committed itself to during the election, Ms Reeves says the basic and state pension will be uprated by 4.1% next year.
This means 12 million pensioners will gain £470 next year.
Fuel duty
A temporary 5p cut to fuel duty was on course to be reversed next year, with the rate also increased in line with inflation, but Ms Reeves says it will remain at current levels.
That will cost the Government £3bn she says, but adds that hiking it “while the cost of living remains high… would be the wrong choice”.
“I will maintain the existing 5p cut for another year, too. There will be no higher taxes at the petrol pumps next year,” she says.
Air passenger duty
Air Passenger Duty has not kept up with inflation in recent years, Ms Reeves says.
So she says it will rise by “no more than £2 for an economy class short-haul flight”.
However, for private jets, the rate will increase by 50pc – the equivalent of £450 “per passenger for a private jet to California”.
Alcohol duty
Duty on non-draught products will increase in line with retail price inflation from February next year, the Chancellor confirms.
But she says two-thirds of alcoholic drinks sold in pubs are served on draught and duty on these products will fall by 1.7pc.
This means “a penny off a pint in the pub”.
Tobacco duty
The Government will increase tobacco duty by retail price inflation, plus 2pc, every year for the rest of this parliament, Ms Reeves announces.
For hand-rolling tobacco, the rate will also rise 10pc this year. And a flat rate duty will be introduced on all vaping liquids from October 2026.
Along with annual increases in the soft drinks industry levy, she says the measures will raise nearly £1bn per year by the end of the forecast period.
Stamp duty
The stamp-duty land tax surcharge for second-homes, known as the “Higher Rate for Additional Dwellings”, will rise by 2 percentage points to 5pc from Thursday, Ms Reeves confirms.
This will “support over 130,000 additional transactions from people buying their first home, or moving home” over the next five years, the Chancellor claims, although she does not spell out how.
Full Budget
The Full Budget document can be found here.
Support and Advice
If you need help understanding how the Budget impacts you or your Business, get in touch on 01332 981920 or 01773 424009 to speak with our team. Our Derby and Ripley Accountancy team are able to advise on how the Budget will impact your finances.
