The first Labour Budget for over 14 years, not unexpectedly, delivered a raft of significant tax changes.

OBR forecasts
CPI inflation 
2024  2.5%
2025  2.6%
2026  2.3%

GDP growth
2024  1.1%
2025  2%
2026  1.8%
2027  1.5%

Employers

• The National Living Wage will increase from £11.44 to £12.21 an hour from April 2025.
• The National Minimum Wage for 18 to 20-year-olds will also rise from £8.60 to £10 an hour.
• Employer’s National Insurance Contributions (NIC) will increase to 15% from April 2025.
• The threshold at which employer’s pay NIC will reduce to £5,000 from April 2025.
• The NIC relief for employing veterans is extended to April 2026.
• The Employment Allowance will increase to £10,500 from April 2025 and the £100,000 eligibility threshold will be removed.
• No change to the Corporation Tax rates nor the Annual Investment Allowance.
• The company electric car benefit in kind charge will increase to 7% for 2028/29 and 9% 2029/30.
• Vehicles with CO2 emissions of 1g to 50g per km will have charges based on 18% in 2028/29 and 19% 2029/30.
• The appropriate percentages for all other emission bands will increase by 1 percentage point per year in 2028/29 and 2029/30; with a maximum percentage of 38% for 2028/29 and 39% for 2029/30.
• From April 2025 double cab pick up vehicles with a payload of a tonne or more will be treated as cars for capital allowance, benefit in kind and business profit deduction purposes. The current rules will continue to apply to those purchased, leased or ordered before 6th April 2025 until sale, the lease ends or latest 5th April 2029.
• Payrolling benefits to be phased in from April 2026 as previously announced.
• Zero emission cars and charge points will continue to benefit from the 100% First Year Allowance until 2026.

Individuals

• From 2028/29 personal tax thresholds will be uprated by CPI.
• Capital Gains Tax rates (excluding those relating to residential properties) will increase from today as follows:
  • 10% to 18% for basic rate taxpayers.
  • 20% to 24% for non-basic rate taxpayers.
• The £1m lifetime allowance for Business Asset Disposal Relief (BADR) will remain unchanged, however the tax rate applied to BADR qualifying capital gains, will increase to 14% from April 2025 and 18% from April 2026.
• The tax rate associated with Investors Relief will follow BADR and its lifetime allowance will reduce to £1m from 30th October 2024 also mirroring BADR.
• The Inheritance Tax (IHT) thresholds will remain at their current level until April 2030.
• The 100% (IHT) reliefs for agricultural and business property will be capped at £1m, with only a 50% relief for the remainder of the asset values from April 2026.
• Agricultural Property Relief will be extended to land managed under an environmental agreement.
• Unspent pension plans will lose their current IHT protections from April 2027.
• ISA/Junior ISA subscription limits will remain unchanged.

Other matters

• The non-dom tax regime will be overhauled from April 2025.
• The private equity carried interest tax rate is set to increase to 32% from April 2025, before entering the income tax regime from April 2026.
• A reduction in the business rate multiplier for high street retail, hospitality and leisure properties from 2026/27, increasing the exposure for more valuable properties.
• The additional property SDLT surcharge will increase from 3% to 5% from 31st October 2024.
• As publicised, from 1st January 2025 VAT will apply to all education, training and boarding services provided by private schools.
• Fuel Duty will be frozen at their current levels for 2025-26.
• 5,000 additional HMRC compliance staff will be recruited to try and close the tax gap.
• Interest on late paid tax will increase to 4% above base rate from April 2025.
• A facility to enable the voluntary prepayment of income tax via the HMRC app will be developed.

Consultation outcomes:

• EOTs and EBTs.
• Charities tax compliance.
• Land Remediation Relief will be consulted on in the Spring.
• Transfer Pricing, permanent establishments and diverted profits tax to be consulted on in the Spring.
• Simplifying the taxation of offshore interest is now open.

When reflecting on changes to the tax environment, its worth initially reviewing its impact and then making decisions for the long-term, as the tax chess board shifts continuously.

If you would like to discuss your situation, please contact us.