Working together to keep the complicated simple

Autumn Statement 2024 Analysis

Rachel Reeves has now delivered the first Labour Budget of this parliament, and as expected it was a busy one.

As always, we will concentrate on the points most relevant to our clients, but the full documents can be found here (if you have the time and desire to read all the technicalities).

Employers’ National Insurance rises

The employers’ rate of NI will increase from 13.8% to 15% from 6 April 2025. This comes alongside a drop in the threshold for employer’s NI from £9,100 to £5,000, which means the 15% employers’ NI rate will become payable on the majority of salaries above £5,000.

To soften the blow for small businesses, the Employment Allowance will increase from £5,000 to £10,500. As before, the eligibility criteria remain the same, which means that one-person limited companies will not qualify for the allowance.

Capital Gains Tax increase and changes to BADR

The lower and higher main rates of Capital Gains Tax will increase to 18% and 24% respectively for disposals made on or after 30 October 2024. This means that there is no longer a difference in rate between residential property and other asset disposals.

BADR (Business Asset Disposal Relief) isn’t changing immediately, but the current rate will be phased out by April 2026 and brought in line with the new lower rate of Capital Gains Tax of 18%.

The rate of Capital Gains Tax that applies to BADR is increasing from 10% to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026.

Company loans to shareholders

The Chancellor also announced changes to the rules surrounding loans to shareholders “to remove opportunities to side-step the anti-avoidance rules”. However, further details on this are yet to be seen.

Increase of the interest rate on late payments to HMRC

Late payment interest is charged on Income Tax and Capital Gains Tax if not paid by the relevant deadline. At the time of writing, this is set at the base rate (5%) plus 2.5%, which puts the current interest payable at 7.5%. From 6 April 2025, this rate will increase by 4% on top of the base rate.

Making Tax Digital for Income Tax

The Government confirmed their intention to deliver Making Tax Digital for Income Tax. This will affect sole trading businesses and landlords with qualifying income, obligating them to maintain digital records and update HMRC each quarter.

This will apply to self-employed individuals and landlords with qualifying incomes (not profit) of over £50,000 from April 2026, and to those with qualifying incomes of over £30,000 from April 2027. However, given the history of MTD being postponed a few times now, we will revisit this closer to the time.