Important Updates from the Autumn Budget 2024

As always, LeeP Accountants is here to keep you informed about the latest financial changes impacting businesses. The recent Autumn Budget announcement on 30 October 2024 includes several updates that may affect your business and personal finances. Below are some key highlights:

Employer’s National Insurance (NI)

  1. Increase in Employer’s NI Rate: The employer’s NI rate will rise from 13.8% to 15%. This adjustment may impact overall payroll costs for many businesses, so it’s essential to budget for this change in your 2024-2025 planning.
  1. Threshold Reduction: The threshold at which employer NI contributions is triggered will be reduced from £9,100 down to £5,000.  This means that for an employee who is earning £30,000 a year, this will cost an employer £865.80 more in the year

Increased Employment Allowance: To partially offset the increase for employers, the employment allowance has been raised from £5,000 to £10,500 and this allowance has also now been opened up to ALL employers (previously only small employers were eligible).

National Minimum Wage

  1. The hourly national minimum wage will increase from £11.44 to £12.21 for those over 21 years and will increase from £8.60 to £10.00 for 18-20 year olds (16-18 year old rate yet to be announced)
  1. This will mean that a full time 22 year old employee on NMW would cost £2,545/yr more to employ:

Capital Gains Tax (CGT) Rates

CGT rates will rise from 20% to 24% for higher-rate taxpayers and from 10% to 18% for basic-rate taxpayers. This increase affects gains on assets such as property, crypto and investments (unless housed in an ISA), so it’s crucial to review any disposal plans you may have.

Landlords

  1. Stamp Duty Increase:  For second homes, the stamp duty rates increased with immediate effect from 3% to 5% meaning a £250K property will now cost an additional £5,000 to buy.
  1. The previously announced FHL changes are set to come into effect from April 2025 which means that if you own or operate a furnished holiday let (AirBNB, holiday cottage, static home etc) then:
    1. Mortgage interest will no longer be an allowable expense
    2. No more capital allowances –> instead you can claim the replacement of domestic goods where a like-for-like replacement is permitted
    3. The sale of your FHL will no longer qualify for business assets disposal relief which means that you would have to pay the higher rate of capital gains tax on sale. So if you sold your FHL for £50K gain (say) this means an additional tax charge of £4K at least.

VAT on School Fees

VAT Introduced on Private School Fees: private schools will no longer qualify for the VAT exemption and a 20% VAT charge will be applied to private school fees starting in April 2025. This means that if you’re paying out £5,000 a term on fees, expect to fork out an extra £3,000 a year.

Business Assets Disposal Relief

For those considering selling up or disposing of business assets that would qualify for Business Assets Disposal Relief, this will increase from April 2025 from 10% to 14% meaning that if you sold your business for say £100,000 on 31st March 2025 you would only pay capital gains tax of £10K as opposed to selling it on 6th April 2025 and paying an extra £4K of tax. From 6th April 2026, this goes up to 18% tax.

Other Notable Announcements

  1. Late tax payment charges & interest will increase by 1.5% from 2.5% to 4% for any overdue payments to HMRC so if you owe £10K (say) in corporation tax, you can expect your monthly interest to be around £35/month
  2. Clamping down on IR35 avoidance so personal service companies may be under greater scrutiny.
  3. From April 2025, double-cab pick ups will be treated as car as opposed to commercial vehicles

We’re here to support you in navigating these changes, offering strategic advice tailored to your situation. If you have any questions about how these updates may impact you or would like to discuss tax planning, please don’t hesitate to reach out.

Tel: 01733 699033

LeeP Accountants

Helping you keep more of your money