AIMS Accountants for Business
AIMS Accountants for Business
Today the Chancellor unleashed her highly anticipated budget designed to “restore economic stability”, “get the economy growing” and “give wealth and opportunities for all” in a responsible way, ending “short-termism”. The Chancellor plans to fix the NHS and provide specific funding for compensation for blood and Post Office scandal victims amongst other things. She also stated that the Government will crack down on fraud in the welfare system, clamp down on rogue umbrella companies and go after promoters of tax avoidance schemes.
You may have already read that this could mean higher taxes, today she confirmed she will be increasing tax receipts by £40 billion. Has this been an early Halloween horror show or have the gloomy predictions been unfounded? Here, we have summarised the key points that we think will be relevant to our clients:
Employment and National Insurance Contributions (NIC)
Unwelcome news for some employers. As has already been widely reported in the media, employers’ NIC are increasing. From April 2025 employers’ NIC will go up by 1.2% to 15%, as well as reducing the secondary threshold (the amount of pay after which employers’ NIC becomes payable) from £9,100 to £5,000. There is some relief for businesses that can claim the Employment Allowance, which is going up from £5,000 to £10,500.
The National Minimum Wage will be increased as follows from April 2025:
• Employees aged 21 and over will need to be paid £12.21 an hour (increase of 6.7%)
• Employees aged 18-20 will need to be paid £10.00 an hour (increase of 16.3%)
• The apprentice rate will be £7.55 an hour (previously £6.40)
Capital Gains Tax (CGT)
Big changes announced in the taxation of capital gains from today. At the moment there are higher rates of CGT for residential properties. The changes will mean that the regular rate of CGT will be the same rate payable as on residential properties as follows:
• The lower rate of CGT will go up from 10% to 18%
• The higher rate of CGT will go up from 20% to 24%
The relief available to entrepreneurs when selling their business, known as Business Asset Disposal Relief (BADR) is going to be reformed. Currently the rate for qualifying gains is 10%. However, it will increase to 14% from April 2025 and to 18% in April 2026 aligning with the basic rate for CGT. The lifetime limit for BADR disposal of £1m will remain.
Stamp Duty Land Tax (SDLT)
There will be an immediate change to SDLT. The additional dwelling surcharge, payable by residential landlords and businesses purchasing additional residential properties, is increasing from 3% to 5%.
VAT
The Chancellor confirmed that the proposed change of VAT rate for private school fees (from exempt to 20%) would go ahead in January 2025. As well as this, business rates relief will be removed for those private schools which are currently eligible.
Inheritance Tax (IHT)
The nil rate band that is currently £325,000 and main resident nil rate band of £175,000 are to be frozen until 2030. However, there are some changes to IHT on the horizon:
• Inherited pensions, currently outside the scope of IHT, come into the regime from 2027.
• The government will reform agricultural property relief and business property relief from April 2026
Non-domiciles
The tax benefits enjoyed by UK residents that are non-domiciles will come to an end from April 2025, abolishing the current regime. This is moving to a residence-based scheme and closing loopholes.
As usual there is a lot to digest, and the devil will be in the detail. If you have any questions about the budget, we encourage you to get in touch with your AIMS accountant.