2024 Autumn Budget

It could have been a lot worse …

Tax on company sales

Many advisers have spent the last few weeks racing to complete company share sales to ensure that sellers can take advantage of low CGT rates, especially in light of a fear that Business Asset Disposal Relief would be curtailed. For their clients, the Budget brought mixed news:

The general rates of CGT were raised with immediate effect, with the main rate of CGT increasing to 24%, a lower increase than had been feared.
BADR will gradually reduce in value but remains available on a lifetime allowance of £1 million at 10% until April 2025. For the tax year 2025-26, the rate of tax within BADR will increase to 14%; thereafter it will be 18% (still a substantial reduction to the main rate of CGT).

There will therefore be an incentive to complete company sales which are in the works but missed yesterday’s deadline by no later than 5 April 2025.

Employer NICs

Again, there was mixed news here. Two major changes will take effect on 6 April 2025:

The rate of employer NICs will increase from 13.8% to 15%; and
The lower threshold of salary to which employer NICs apply will be reduced from £9,100 to £5,000. This second change will result in an additional liability per employee of up to £615.

However, there is a saving grace for small businesses, which see a rise in the Employment Allowance (which is effectively a reduction in a business’ employer NICs bill) from £5,000 to £10,500. Many small businesses will therefore continue to escape the burden of employer NICs altogether.

“865,000 employers won’t pay any National Insurance at all next year and over 1 million will pay the same or less than they did previously”

— Chancellor’s Speech

Tax certainty and predictability

A very welcome development was the announcement of a Corporate Tax roadmap. The roadmap includes the following important commitments:

Corporation Tax is capped at 25% for this Parliament and the small profits rate and marginal relief for businesses with profits of below £250,000 will remain in place;
Maintaining the system of permanent full expensing for this Parliament, along with £1 million Annual Investment Allowance, writing down allowances, and the Structures and Buildings Allowance; and
Protecting the generous R&D credits and reliefs regime, the Patent Box and the UK’s competitive regime for intangible fixed assets.

The Government has also announced its intention to consult on the UK’s transfer pricing regime, including a potential reduction in the size threshold for businesses to which the rules apply.

Stamp duty land tax on residential property

The surcharge rate of SDLT will be increased with effect from 31 October from 3% above normal rates to 5%. The surcharge rate applies to:

purchases of residential properties by individuals who already own another residential property (unless they are “replacing their main residence”) and
purchases of residential property by companies.

It can be unpleasant trap for anyone who decides to buy an investment property before buying their own home.

There will also be an increase (from 15% to 17%) in the SDLT payable by companies which purchase a residential property for more than £500,000 (again with effect from 31 October 2024). Again, this can be a nasty trap for companies which purchase an investment property intending it to be a source of rental income but which is then used by a shareholder’s family member within the following three years.

“Those who exchanged contracts prior to 31 October 2024 are not affected by this rate increase”

— 2024 Budget

Personal tax changes

Other key changes focused on wealthy individuals.

Changes were announced to IHT, with reductions in relief for agricultural property and business assets;
The non-dom rules are to be abolished with a replacement regime for temporary residents (it remains to be seen whether this will prompt the promised exodus of internationally mobile taxpayers);
Fund managers receiving carried interest will become subject to income tax on what they receive, instead of CGT, with a half-way house during 2025/26 of CGT with a special rate of 32%; and
As promised, VAT will apply to private school fees from January 2025. No allowance has been made for the substantial difficulties which schools may face in bringing in this change.