The Chancellor of the Exchequer presented her 2024 Spring Budget to parliament on 30th October 2024. We are pleased to share our summary and key points that came out of this budget.
A summary of the 2024 Autumn Budget announcements, including changes to taxes, pensions, trusts and inheritance tax.
Income tax:
The personal allowance will remain at £12,570, and this is frozen until 2028.
The rates for the UK (excluding Scotland) will remain at:
- Basic tax rate 20% on first £37,700 over the personal allowance.
- Higher rate 40% on earnings over £37,700 plus personal allowance.
- Additional rate 45% on earnings over £125,140.
The rates of income tax for Scottish taxpayers will be announced in the Scottish Government’s budget in December.
Employee National Insurance
As with income tax, Labour stated in their manifesto they wouldn’t increase employee National Insurance contributions. From 6 April 2025, employee National Insurance will remain at:
- Class 1 National Insurance contributions employees will pay 8% on their earnings between the primary threshold and the upper earnings limit; between £12,570 and £50,270.
- Class 1 National Insurance contributions employees pay 2%, on their earnings above the National Insurance contributions upper earnings limit.
Employer National Insurance
Class 1A and 1B employer National Insurance contributions from 6 April 2025 will be increased from 13.8% to 15.0% on earnings over £5,000.
The Secondary Threshold, from which employer contributions start to be paid, will reduce from £9,100 a year to £5,000 a year.
The Employment Allowance, which allows employers who pay less than £100,000 in National Insurance contributions to reduce their National Insurance bill, will increase from £5,000 to £10,500 from 6 April 2025.
Pension death benefits
There is normally no inheritance tax on death benefits if the choice of beneficiary is the scheme administrator’s, using their powers of discretion. From 6 April 2027, inherited pension death benefits will be subject to inheritance tax regardless of who chooses the beneficiaries. The Government will consult on the processes needed to implement these changes.
State pensions
The Government is keeping the triple lock. The Basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2025 by 4.1%, in line with earnings growth in September 2024.
- The new State Pension will rise by £474.85 to £12,016.75 a year.
- The Basic State pension will rise by £361.40 to £9,175.40 a year.
Individual savings account (ISA)
Subscription limits remain the same from 6 April 2025 so are:
- Adult ISA annual subscription – £20,000
- Child Trust fund – £9,000
- Junior ISA – £9,000
- Lifetime ISA – £4,000
It was announced that the Government will not be moving forward with the British ISA due to mixed responses to the consultation launched in March 2024.
Inheritance tax
The nil rate band (£325,000) and the residential nil rate band (£175,000) will remain frozen until April 2030.
Qualify business property investments such as AIM shares will have their relief cut from 100% to 50%, ie will be subject to IHT at 20%.
From 6 April 2026, an individual will be able to leave combined business and agricultural assets to their loved ones of £1million without an Inheritance tax liability, with any excess being taxed at 20%.
From 6 April 2025, the domicile-based system for inheritance tax will be replaced by a residency-based system.
Capital Gains Tax
From 30 October 2024 the lower rate will be increased from 10% to 18%, with the higher rate being increased from 20 to 24%. This brings the rates in line with the rates for residential property. The annual allowance remains at £3,000.