The Autumn Budget 2024 brings a range of strategic fiscal adjustments to stabilize the UK’s economy amid global challenges. With significant updates across corporation tax, business rates, inheritance tax, and employment policies, the government is laying the groundwork to foster growth and enhance resilience.
In this blog, we’ll explore the key measures introduced in this year’s budget, their anticipated impact on different sectors, and the practical implications for individuals and businesses.
Key Highlights of the Autumn Budget 2024
1. Corporate Tax Adjustments
- Corporation Tax Cap: The government’s Corporate Tax Roadmap has capped the main rate of corporation tax at 25%, with current small profits rates and thresholds remaining intact until the end of the current Parliament. This measure seeks to provide stability and predictability for businesses.
- Banking Sector Levies: The Bank Levy and Bank Surcharge remain “under review,” allowing for adjustments to support balanced contributions from the financial sector while encouraging growth.
2. Capital Allowances and Investment Incentives
- Full Expensing and Investment Allowances: Businesses can continue to benefit from full expensing relief and a £1 million annual investment allowance, reinforcing incentives for capital investment.
- Green Incentives: A 100% first-year allowance has been extended for zero-emission vehicles and charging stations, promoting eco-friendly business investments until March 2026.
3. Research and Development (R&D) Tax Relief
- Continued R&D Relief: The merged R&D Expenditure Credit and Enhanced R&D Support for SMEs will continue at current rates, helping innovative companies remain competitive. New measures also aim to reduce fraud in R&D claims, such as an R&D expert advisory panel and a simplified claims disclosure facility.
4. Revised Business Rates
- Retail, Hospitality, and Leisure Rate Reductions: Businesses in these sectors with a rateable value under £500,000 will benefit from lower business rate multipliers starting in April 2026. For 2025–2026, businesses in these sectors will receive 40% relief up to a £110,000 cap, while the small business multiplier remains frozen.
5. Inheritance Tax (IHT) Changes
- Frozen IHT Thresholds and Reforms to Business and Agricultural Reliefs: IHT thresholds will remain frozen until April 2030. From April 2026, business and agricultural property relief will be set at 100% for the first £1 million, with a reduced rate of 50% for assets above this threshold.
- Inheritance Tax on Pension Pots: From April 2027, inherited pension pots will be subject to IHT, with new digital services streamlining tax filing.
6. Stamp Duty Land Tax (SDLT) and VAT Revisions
- Increased SDLT on Additional Dwellings: For additional properties, SDLT rates will rise from 3% to 5%, and from 15% to 17% for corporate entities purchasing properties over £500,000.
- VAT on Private School Fees: Set to take effect in January 2025, VAT will apply to most private school fees, with certain exemptions for non-maintained special schools and educational needs programs.
7. National Living Wage and National Minimum Wage
- From April 2025, the National Living Wage will increase to £12.21 per hour, marking a historic rise aimed at supporting low-wage workers amid rising living costs.
8. Employment Tax and Benefits in Kind (BiKs)
- Employer’s NIC Adjustments: Employer’s NIC will increase by 1.2% from April 2025, while the Employment Allowance rises to £10,500. Relief for hiring veterans has been extended to April 2026.
- Mandatory Real-Time BiK Reporting: Employers will be required to report income tax and NIC on benefits in kind through payroll by April 2026, transitioning BiK tax obligations to a “real-time” framework.
Impact on Key Sectors
Small and Medium Enterprises (SMEs)
The extension of R&D credits, the continued full expensing relief, and targeted business rate reductions will provide relief to SMEs, enabling them to reinvest in business growth and innovation.
Real Estate and Property Development
The increased SDLT rates on additional properties are likely to impact property investors, while stamp duty exemptions on eco-friendly housing developments may drive demand in sustainable construction.
Financial Sector
The decision to keep the Bank Levy and Bank Surcharge under review suggests a balancing act, with future policies potentially impacting tax strategies for banking institutions.
Conclusion
The Autumn Budget 2024 introduces a broad spectrum of reforms, aiming to build a resilient economy through incentives for investment, strategic tax policies, and measures to support workers and businesses.
By implementing a balanced approach to tax policy and investment incentives, the government aims to position the UK for sustainable growth.
For businesses and individuals, understanding these changes is essential to maximizing financial benefits and navigating the fiscal landscape effectively.
