The Autumn Budget

For the government to achieve its spending objectives, the Budget aimed to raise an extra £70bn, annually. Over half of this amount will be generated by increased taxation, with most measures being applicable from April 2025.

According to the Office for Budget Responsibility (OBR), the UK economy will grow by 1% this year, and 2% in 2025. And, it forecasts that inflation, will be slightly higher than previously thought, at 2.6% in 2025. Both aspects would, undoubtedly, be affected by the increased level of government spending.

Main elements of the extra £36bn tax hit

Employers NI contribution = + £24.5bn
Capital Taxes, such as CGT, IHT & Stamp Duty = + £5.6bn
HMRC compliance activity = + £4.0bn
VAT charges on private school fees = + £1.6bn
(Source: Office for Budget Responsibility, Economic & Fiscal outlook, October 2024)

Employers National Insurance contribution

This is, undoubtedly, the biggest area for the additional tax raising. The NI contribution for employers will increase to 15% on salaries above £5,000, against the current 13.8% for salaries above £9,100. On average, this equates to an annual extra £800 per employee, according to the OBR.

Although, for smaller businesses this may be countered by the rise in the Employment Allowance from £5,000 to £10,500 (where the £100,000 threshold for eligibility has been removed).

Stamp Duty (for England & N. Ireland)

Landlords, and those buying an additional home, were already facing a 3% tax surcharge on their Stamp Duty bill. This has now risen, with immediate effect, to 5%. With no time to plan for the additional financial hit, it may impact the purchase chain.

Also, there’s further bad news, as there was no announcement about extending the discounted Stamp Duty set-up that’s been in place since 2022. The normal rates will be applied from 1 April 2025.

This will mean that from April next year, the nil rate threshold for those buying their primary property will reduce from £250,000 to £125,000. And for First-Time Buyers, it’ll come down from £425,000 to £300,000.

Capital Gains Tax (CGT)

The possibility of increasing taxes on the capital growth of an additional property, when sold, didn’t materialise. But, the CGT on selling shares/assets immediately rises to the same level as an additional property sale. That’s a shift from 10% to 18% for basic rate taxpayers, and up from 20% to 24% for those on the higher rate.

Income Tax

The freezing (since 2022) of Income Tax thresholds is seen as a stealth tax, as more people are drawn into paying tax, or paying at a higher rate, as their incomes rise.

It was thought that this measure might be extended for a year or so beyond 2028. Instead, from the 2028/2029 tax year, the chancellor announced that the thresholds will then rise in line with inflation.

Inheritance Tax (IHT)

These thresholds have also been frozen over time (with the chancellor extending this from 2028 to 2030). A measure that will bring more estates into paying the 40% tax above the threshold amount.

For the individual, the nil tax threshold remains at £325,000. And could rise to £500,000 if the property is also passed on to family. And, if married, or in a civil partnership, then these thresholds could be doubled to £1m, before any tax is claimed.

Although, the chancellor did also announce that from 2027, inherited pensions will also be brought into the IHT calculation.

Fuel Duty

The 5p cut in fuel duty for petrol and diesel, brought in by the Conservatives (due to end in April 2025), will be kept for another year.

VAT on Private School fees

This was already out there, and was confirmed by the chancellor, with it coming into effect from January 2025.

Non-Dom regime to be scrapped

From April 2025 this will be replaced with a new residence-based scheme. Time will tell if this has an impact on the property-buying activity of the Non-Doms.
(Sources: HM Treasury, October 2024)

The Financial Conduct Authority does not regulate taxation advice.

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