Income tax and National Insurance
The income tax and National Insurance thresholds in England and Wales will remain frozen until the end of 2027/28, when they will begin to rise in line with inflation.
Rates of income tax and National Insurance paid by employees have not been changed.
Employers’ National Insurance Contributions will rise from 13.8% to 15% on an employee’s earnings from April 2025, and the threshold at which employers start paying Employers National Insurance Contributions on each employee’s salary will be reduced from £9,100 a year to £5000.
The employment allowance will increase from £5,000 to £10,500. The current £100,000 threshold will be removed and therefore larger organisations will now benefit.
Capital gains tax
From 31st October 2024, Capital Gains Tax rates will increase from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher rate taxpayers. This will be the same as existing rates for property which stay the same. Rates on chargeable gains from selling additional property remain unchanged at 18% and 24%, respectively.
Business Asset Disposal Relief will remain at 10%, before rising to 14% on 6 April 2025, and 18% from 6 April 2026.
Inheritance tax
The Inheritance Tax threshold of £325,000 will remain until 2030.
From April 2027, inherited undrawn pension pots will be subject to Inheritance Tax.
From April 2026, agricultural property relief and business property relief will be altered, with the highest rate of relief remaining at 100% for the first £1m of combined business and agricultural assets on top of the existing nil-rate bands. The rate of relief will reduce to 50% after the first £1m.
Offshore trusts will no longer be able to shelter assets from Inheritance Tax, and there will be transitional arrangements.
Stamp duty land tax
The higher rate for additional dwellings surcharge of SDLT in England and Northern Ireland will rise from 3% to 5%, from 31 October 2024.
The rate of SDLT for companies purchasing residential property will rise from 15% to 17%.
Value added tax
The standard rate of VAT will remain at 20%.
VAT at the standard rate will be added to private school fees and boarding services from 1 January 2025.
Business rates
The current 75% discount to business rates, for high street retail, hospitality and leisure properties, will expire in April 2025 and will be replaced by a discount of 40%, up to a maximum of £110,000.
Private schools in England will lose business rates charitable rate relief from April 2025.
Corporation tax
The main rate of corporation tax paid by businesses on taxable profits over £250,000 will remain at 25% until the next election.
Non-Domicile Tax Regime
A new residence-based regime will replace the current regime from April 2025, and the planned 50% reduction for foreign income in the first year of the new regime will be removed.
Other Announcements
There will be no changes to the current capital allowances system
Research and Development reliefs are also unchanged
The National Minimum Wage will increase from April 2025 to £12.21 per hour. The 18-20 rate will increase to £10 per hour.
About the Author
Geoff Burningham
Tax Associate
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