The full Autumn Budget 2024, along with supporting and related documents, has been published on the gov.uk website. We have prepared a summary of the announcements.
Personal tax
Changes to the taxation of non-UK domiciled individuals
The government will implement legislation in Finance Bill 2024-25 to replace the remittance basis of taxation for non-UK domiciled individuals with a residence-based regime, effective from April 6, 2025.
For the first four years of tax residency, individuals who choose to participate in the regime will not be required to pay UK tax on foreign income and gains (“FIG”). The government will eliminate the proposed 50% reduction in foreign income subject to tax in the first year of the new regime and introduce a residence-based system for inheritance tax, starting on April 6, 2025.
Current and previous remittance basis users will have the option to rebase personally held foreign assets to April 5, 2017, for capital gains tax purposes.
Inheritance tax nil-rate band and residence nil-rate band
The inheritance tax nil-rate bands are now established at their current levels until April 5, 2028. The government plans to draft legislation in Finance Bill 2024-25 to fix these levels for a further two years, until April 5, 2030. The dwelling nil-rate band will remain at £175,000, while the nil-rate bracket will remain at £325,000.
Changes to the capital gains tax (“CGT”) rates
The government will propose legislation in Finance Bill 2024-25 to raise the main rates of CGT from 10% and 20% to 18% and 24%.
For disposals made on or after October 30, 2024, the modification will go into effect. For disposals on or after April 6, 2025, the CGT rate for Business Asset Disposal Relief and Investors' Relief will increase to 14%; for disposals on or after April 6, 2026, it will increase from 14% to 18%. The 18% and 24% capital gains tax rates that apply to gains from residential real estate will remain unchanged.
Capital gains tax — Investors’ Relief — reduction in the lifetime limit
The government will lower the Investors' Relief lifetime cap from £10 million to £1 million for Investors' Relief qualifying disposals made on or after October 30, 2024.
Carried interest taxation reform
As stated in July 2024, the government will change the taxation of carried interest to make it more consistent with the reward's economic nature.
A 72.5% multiplier will be applied to qualified carried interest brought into charge under the income tax structure starting in April 2026. The government will raise the capital gains tax rate for carried interest to 32% starting on April 6, 2025, as a stopgap measure.
Business tax
Corporation tax charge and rate
The government will maintain the main rate at 25% and the small profits rate at 19% for the financial year beginning April 1, 2026.
Capital allowances — extending first-year allowances for zero-emission cars and electric vehicle charge-points
The government will introduce legislation to extend the 100% first-year allowances for zero-emission cars and electric vehicle charge-points until:
- March 31, 2026, for Corporation Tax
- April 5, 2026, for Income Tax
Changes to secondary Class 1 (employers’) National Insurance
The primary rate of secondary Class 1 National Insurance contributions will rise from 13.8% to 15% from April 2025. In keeping with this, the employer rates for Class 1A and Class 1B will also rise.
Additionally, the government will propose legislation to raise the Employment Allowance from £5,000 to £10,500 and eliminate the current restriction that only employers who have incurred a secondary Class 1 National Insurance contributions liability of less than £100,000 in the previous tax year are eligible to benefit from the program.
VAT on private schools
From January 1, 2025, all education services and vocational training provided by a private school or connected person in the UK for a charge will be subject to VAT at the standard rate of 20%. Pre-payments of fees or boarding services made on or after July 29, 2024, that relate to terms starting after January 1, 2025, will also be subject to VAT at the standard rate. The changes will take effect from October 30, 2024.
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