The Chancellor Rachel Reeves has set out proposals to raise £40bn in taxes. There were over 1000 pages of legislation so we have tried to pull out a few of the significant points in digestible form, please get in touch if you have any questions. 

 

The key changes / announcements made on 30 October 2024 are highlighted in brief below. 

 

As expected, the Chancellor confirmed that the remittance basis will be abolished from 6 April 2025 and replaced with the foreign income and gains regime (FIG regime). As well as publishing a detailed technical paper, 103 pages of draft legislation for Finance Bill 2025 was also released. If you are non-UK domiciled and concerned about these changes please contact us for bespoke advice. 

 

For disposals made on or after 30 October 2024, the main CGT rates applying to assets other than residential property and carried interest are increased from 10% and 20% to 18% and 24% respectively, and the rate applying to trustees and personal representatives is increased from 20% to 24%. The rates applying to residential property disposals (18% and 24%) will remain unchanged. Transitional provisions apply for contracts entered into before 30 October 2024 but completed after that date. 

Business asset disposal relief (BADR) is a capital gains tax (CGT) relief that allows business owners with chargeable gains on qualifying business assets to pay CGT at a rate of 10%. The relief is available on up to £1m of capital gains for each individual over their lifetime. Relief is available on gains arising to sole traders, partners, shareholders and trusts. 

The Chancellor announced that the lifetime limit will remain at £1m but the rate of tax for BADR will increase to 14% from 6 April 2025 and then rise to 18% from 6 April 2026 to match the main lower rate. 

Investors’ relief (IR) is a capital gains tax (CGT) relief on the disposal of qualifying shares in an unlisted company. A taxpayer making a disposal that qualifies for IR pays tax at a rate of 10%. There is a lifetime limit on the relief of £10m, which is in addition to that applying for business asset disposal relief. The relief is available to individuals or trustees. 

At the Autumn Budget 2024 it was announced that the lifetime limit for IR will be reduced to £1m for all qualifying disposals made on or after 30 October 2024, matching the lifetime limit for business asset disposal relief (BADR). 

As with BADR the rate of tax for IR will increase to 14% from 6 April 2025 and then rise to 18% from 6 April 2026 to match the main lower rate. 

 

The national living wage (NLW) will increase by 6.7% from £11.44 to £12.21 an hour from April 2025. The national minimum wage (NMW) for 18 to 20-year-olds will also rise from £8.60 to £10.00. Over time, the Government intends to align the NLW and NMW to create a single adult rate.  

The Autumn Budget 2024 introduced two significant increases to employer secondary NIC rates. From 6 April 2025 the main employer rate will increase from 13.8% to 15%. Also, the Secondary Threshold, below which no employer’s NIC is payable, will reduce from its current level of £9,100 per annum, to £5,000 per annum. 

To at least partially offset these rises, the Government also confirmed two significant changes to the employment allowance, taking effect from 6 April 2025. Firstly, the allowance will increase from £5,000 to £10,500 per annum, from 6 April 2025. 

In addition, the existing Employment Allowance eligibility threshold, limiting the allowance to employers who have a total employer’s NIC bill of £100,000 per annum or less, will be removed. This means that the size of the employer will no longer disqualify a claim for the Allowance. 

As a follow up to earlier announcements, the Government has confirmed that the current process, whereby benefits in kind may be payrolled by employers, will become mandatory from 6 April 2026. 

The new process will replace the current default method, whereby employers return benefits annually on forms P11D. For the present, the current exceptions for employer related loans and living accommodation will be retained though, from April 2026, the employer may opt voluntarily to include these items in their payrolling benefits processes. 

The Government remains concerned that there are significant levels of fraud, as well as non-compliance, in the umbrella payroll sector. Following on from earlier consultation, the Government confirmed its intention to put greater onus on employment businesses or agencies, as well as onto end clients. 

The new rules will apply from 6 April 2026, where a temporary worker is paid through an umbrella payroll provider. The intention is to make agencies responsible for accounting for PAYE on payments. The agency will be the party liable for PAYE tax and NIC. Where there is no such agency, this responsibility will alternatively fall on the end client. The change is likely to require that both agencies and end clients carefully review their temporary worker supply chains. 

 

Two changes to the rates of SDLT will take effect for transactions in residential property with an effective date (usually the date of completion) on or after 31 October 2024. 

The first change is to the higher rates of SDLT for purchases of additional residential properties by individuals and for purchases of such properties by companies and certain trusts. The change equates to an increase of five percentage points to the normal rates for residential properties; the current increase is three percentage points. 

The second change is to the single rate of SDLT that applies to purchases of residential properties worth more than £500,000 by companies and other non-natural persons. The single rate is increased from 15% to 17%. 

These changes will not apply where the contract was entered into before 31 October 2024, but there are exceptions to this rule including for variations or assignment of rights and subsales taking place on or after that date. 

 

The Government has announced two changes to the corporate research and development reliefs. The first change is a technical correction to the R&D intensity condition which applies to expenditure incurred on or after 1 April 2023, in an accounting periods beginning before 1 April 2024. Accounting periods beginning on or after the latter date are not affected as the R&D intensity condition for such periods is subject to separate legislation. 

For affected periods, the intensity condition required the ratio of qualifying R&D expenditure to total expenditure to be 40% or more. The legislation introducing the condition, however, did not take account of expenditure which qualified for research and development expenditure credit (RDEC). It was always intended that such expenditure should be included and this will be rectified with retrospective effect. 

The second change is to the special rules which apply to certain companies with a registered office in Northern Ireland which claim under the SME scheme for accounting periods beginning on or after 1 April 2024, available only to loss-making R&D ― intensive SMEs. Under the current rules relief is restricted by applying a rolling three-year limit of £250,000 and restrictions on R&D undertaken outside the UK are removed. A company can opt out of the special rules if it does not carry on a trade involving goods or electricity. 

For claims made on or after 30 October 2024, the cap will be increased to €300,000 for most companies (with a lower limit for the agriculture and fisheries sectors) and the legislation, currently in regulations, will be rewritten directly into the R&D provisions in CTA 2009. 

One of the priorities for businesses, given the significant number of changes to corporation tax in recent years, is stability, certainty and predictability of the tax regime. To this end, the Government published a Corporate Tax Roadmap alongside the Autumn Budget 2024 documents. This sets out its plans for the duration of this parliament in respect of corporation tax and a few other associated taxes. The intention is that clarity on their tax position will encourage businesses to invest in long-term projects and so increase growth in the economy as a whole. 

The roadmap sets out several key commitments (see below) and also includes a list of upcoming consultations in the annex. It doesn’t rule out changes to the regime, if they are needed to respond to unforeseen circumstances, but the Government commits to engaging with businesses and tax professionals as much as possible in respect of any actions it takes. It will also publish further information on its plans and approach in the future. 

The key tax commitments include: 

• capping the headline rate of Corporation Tax at 25% for the duration of parliament and retaining the small profits rate and marginal relief at current rates and 

• maintaining full expensing for capital allowances for this parliament and the £1m annual investment allowance, plus exploring an extension of full expensing to assets that are leased or hired 

• keeping research and development (R&D) reliefs at current rates and looking to improve the administrative side of the relief plus consulting on widening the access to advanced clearances 

• maintaining the patent box and intangible fixed asset regimes 

• maintaining the audio-visual expenditure credit and video game expenditure credit 

• consulting on the effectiveness of land remediation relief 

• consulting on potential reforms to the transfer pricing regime (including removing UK-to-UK transfer pricing), the UK’s rules on permanent establishments and the diverted profits tax 

• working collaboratively with companies on simplification and improving user experience, including HMRC’s path forward on digitisation. 

• developing and consulting on a new process for increasing the tax certainty available in advance for major investments 

 

Business property relief ― rate reduction to 50% for some shares 

From 6 April 2026 the rate of business property relief (BPR) available on shares traded on a recognised stock exchange which is designated as ‘not listed’ will no longer qualify for BPR at 100%. From this date the rate of relief will be 50%. This provision is targeted at AIM shares. 

Anti-forestalling measures mean that these new rules will apply for lifetime transfers on or after 30 October 2024 if the donor dies on or after 6 April 2026. So a lifetime gift to an individual of unquoted shares made on or after 30 October 2024 where the donor dies on or after 6 April 2026 but within seven years of the gift will be a failed potentially exempt transfer to which only 50% relief will apply. 

Business property relief and agricultural property relief ― 100% relief cap 

For transfers on or after 6 April 2026 the combined value of business property relief (BPR) and agricultural property relief (APR) available at 100% will be capped at £1m. The relief given on the balance of any property qualifying for BPR or APR will be at 50%. Where the qualifying property is a mix of both agricultural and business property then the £1m will be allocated proportionately. 

If the £1m allowance is not used in full then it is lost and is not transferable to a spouse. 

The allowance will cover all transfers made by an individual on death and in the seven years before death. 

It was announced at the Conservative Spring Budget 2024 that domicile would be abolished as the connecting factor for IHT. Labour’s Autumn 2024 Budget has confirmed that from 6 April 2025, a new residence-based system for Inheritance Tax will be introduced. 

From 6 April 2025, the test for whether non-UK assets are chargeable to IHT will be whether the individual has been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event arises. They will be known as a ‘long-term resident’. 

Those leaving the UK will remain in the scope of IHT for three years if they have been resident between 10 and 13 years. This will then increase by one tax year for each additional year of residence. An individual will not be treated as long-term resident for IHT purposes in the year following 10 consecutive years of non-residence. 

The statutory residence test (SRT) will apply when assessing residence and the pre-SRT rules will apply for periods before its introduction on 6 April 2013. 

If the settlor or a trust has died before 6 April 2025 then the excluded property status of the trust will be decided on the old test ― that is the settlor’s domicile when the assets were settled. Otherwise, excluded property comes within the new regime based on whether the transferor is a long-term resident. This is a major change from the original Conservative proposals. 

From 6 April 2027 unused pension funds and death benefits payable from a pension will form part of an individual’s estate for IHT purposes. The scheme administrators will become liable for reporting and paying any IHT arising. 

A range of other measures were also announced, which include the following: