In an extensive address marking Labour’s return after nearly 15 years, Chancellor Rachel Reeves delivered the Autumn Statement on 30th October 2024. Below, we provide a summary of the key changes relevant to the financial planning sector.
For a detailed breakdown of tax rates and allowances for 2025/26, visit www.gov.uk
Taxation and Non-Domicile Regulations
Starting 6th April 2025, the UK will eliminate the non-domicile tax regime, replacing it with rules based on residency. This includes:
– A new 4-year foreign income and gains regime for recent arrivals.
– A Temporary Repatriation Facility for pre-6th April 2025 foreign income.
– Reform of Overseas Workday Relief and a shift to residence-based inheritance tax.
Value-Added Tax (VAT)
Effective January 2025, VAT will be imposed at 20% on all private school fees in the UK, and associated charitable rates relief will cease in England.
Income Tax and National Insurance
Income tax bands and personal National Insurance thresholds are to remain static until April 2028, after which they will index to inflation.
Capital Gains Tax (CGT) Revisions
– Investors’ Relief lifetime limit cut from £10 million to £1 million for disposals after 30th October 2024.
– CGT main rates to increase from 10%/20% to 18%/24% starting 30th October 2024, with specific rates set to rise incrementally for certain disposals through April 2026.
– Carried interest taxed at 32% from April 2025 and integrated into the income tax framework from April 2026.
Inheritance Tax (IHT) and Pensions
IHT thresholds are now fixed until April 2030.
– Nil-rate band at £325,000
– Residence nil-rate band at £175,000
– Residence nil-rate band taper, starting at £2 million
From 6th April 2027, pension benefits may be included in the deceased’s estate for IHT purposes, covering both defined contribution and benefit schemes.
Business and Agricultural Reliefs
Significant changes from April 2025 and 2026 aim to refine Agricultural Relief and Business Relief, maintaining a 100% relief rate up to £1 million with 50% thereafter. These adjustments focus on unlisted shares and encompass fewer than 2,000 estates annually.
Further information here
National Insurance Adjustments
From April 2025, Employer National Insurance contributions rise to 15%, with the secondary threshold reducing to £5,000 annually. The Employment Allowance will increase to £10,500.
Pensions and International Transfers
Adjustments to the Overseas Transfer Charge and regulations for European Economic Area (EEA) and Gibraltar pensions align these with global standards, effective from 30 October 2024.
Further information here
Stamp Duty Land Tax
The higher rates of Stamp Duty Land Tax (SDLT) for purchases of additional dwellings (second properties) and for purchases by companies is increasing from 3% to 5% above the standard residential rates of SDLT.
This measure also increases the single rate of SDLT payable by companies and other non-natural persons purchasing dwellings over £500,000, from 15% to 17%.
Both changes apply to transactions with an effective date on or after 31 October 2024.
Wage and State Benefit Increases
From April 2025, the National Living Wage will rise from £11.44 to £12.21 per hour.
From April 2025, a 4.1% increase to the basic and new State Pension meaning the full new State Pension will rise from £221.20 to £230.25 a week, while the full basic State Pension will increase from £169.50 to £176.45 per week.
The Pension Credit Standard Minimum Guarantee will increase by 4.1% from April 2025, meaning an annual increase of £465 in 2025/26 in the single pensioner guarantee and £710 in the couple guarantee.
Working-age state benefits and the Additional State Pension will rise by 1.7% in April 2025, in line with inflation.
Changes to Furnished Holiday Lettings (FHL)
The FHL tax regime will be phased out from April 2025, aligning tax treatments for short-term holiday lets with other residential properties.
For more details on these updates and their implications, visit www.gov.uk