Autumn Budget 2024: Key Tax Updates from R&D Tax Manager, Lloyd Hughes.
The latest Autumn Budget has brought in a fresh round of updates for UK taxes, and they’re set to impact businesses, investors, and everyday taxpayers alike.
For those of us working in R&D, the unchanged R&D scheme and the freeze on corporation tax rates provide a level of stability. But the increases in national insurance rates, changes to capital gains tax, and updates to SDLT on second homes will all factor into future planning.
Below, I’ll break down the key tax updates from this Budget — whether you’re a business owner, investor, or just curious about how these updates might impact you, this post covers the key points that you need to know.
- Corporation Tax & Business-Related Liabilities
- Corporation Tax Rate: The corporation tax rate will remain unchanged, offering stability for UK businesses and encouraging long-term planning for corporations without the disruption of rate fluctuations.
- R&D Scheme: No changes were made to the current R&D scheme, or the previously announced merged R&D scheme. This continuity allows businesses to confidently plan their R&D investments.
- Investment Reliefs: The Full Expensing and Annual Investment Allowance reliefs continue, encouraging businesses to invest in equipment and technology with immediate tax benefits.
- Employer National Insurance (NI): From April 2025, employers will see a rise in National Insurance contributions from 13.8% to 15%, with the threshold for payment dropping from £9,100 to £5,000. This increase may mean higher employment costs for businesses, prompting a need for budget adjustments.
- Income Tax & Capital Gains
- Income Tax: No immediate changes to income tax or NICs for employees and the self-employed were introduced. However, beginning in 2028-29, the freeze on income tax rates will end, and personal tax thresholds will adjust according to inflation, potentially offering relief for taxpayers.
- Capital Gains Tax: Adjustments in CGT rates mean an increase in the lower rate from 10% to 18% and the higher rate from 20% to 24%. However, the CGT on residential property remains unchanged, providing some relief to residential property investors.
- Business Asset Disposal Relief: While the lifetime limit for BADR remains at £1 million, its rate will increase to 14% in April 2025 and further to 18% in April 2026. This could impact business owners planning to dispose of assets and retire.
- Non-Dom Tax Regime: The abolition of the Non-Dom tax regime introduces a residence-based scheme, fundamentally changing the tax environment for foreign nationals residing in the UK.
- Inheritance Tax
- Tax on Inherited Pensions: Beginning in 2027, inheritance tax will be payable on inherited pensions, marking a significant change for estate planning.
- Nil Rate Band: The £325,000 threshold for inheritance tax, along with the residential nil rate band, is frozen until 2030, meaning the tax-free amount does not rise with inflation.
- Business Property Relief and Agricultural Property Relief: Reliefs will now be capped, with a 100% relief only available up to £1 million. Excess amounts will see a reduced relief rate of 50%, meaning larger estates could face additional tax.
- SDLT, VAT, & Duties
- Stamp Duty Land Tax: From tomorrow, the SDLT on second homes will increase from 3% to 5%, aimed at cooling the property investment market and addressing housing affordability.
- VAT on Private School Fees: From January 2025, VAT will be applied to private school fees, introducing an additional cost for families and potentially affecting private school enrollment.
- Air Passenger Duty: Private jet users will now face a 50% increase in air passenger duty, an effort likely aimed at aligning environmental responsibility with luxury travel.
- Business Rates Relief: The 75% discount on business rates, set to expire in April 2025, will be replaced by a 40% discount capped at £110,000, impacting businesses previously benefitting from a larger rate cut.
- Alcohol Duty: Hospitality venues serving draught drinks will see a 1.7% duty increase, while other alcoholic beverages face a duty hike in line with the Retail Price Index (RPI), estimated at 2.7%.
- Investments
- UK stocks listed on the Alternative Investment Market (AIM) will have a 50% inheritance tax relief, resulting in an effective rate of 20% tax applied to them
- The Enterprise Investment Scheme (“EIS”) and Venture Capital Trust (“VCT”) schemes will continue till at least 2035, continuing incentivising investment in early-stage companies.
Want to find out more about how these changes might impact you and your business?
Get in touch via the contact the details below;
📞 0333 455 9010
💻 www.cbtax.com
📧 info@cbtax.com
