‘£40 billion tax raise and £32 billion of additional borrowing to fund services & infrastructure investment’
Tax Changes:
- Employers NI Increase
- From April, the rate will increase by 1.2% from 13.8% to 15%.
- The threshold from which Employer NI is paid reduces from £9,100 to £5,000.
- The combination of these two measures results in significant additional cost for businesses to employ.
- To help small employers, the NI Employment Allowance increases from £5,000 to £10,500.
- Whilst not applied directly to employees, expectation is that employees will shoulder part/most of the cost via lower pay rises.
- Child Benefit
- The threshold for the high-income child benefit charge will remain at what was previously a temporary £60,000. Child Benefit will continue to taper away as income rises between £60,000 and £80,000.
- Stamp Duty on ‘additional property’
- Stamp Duty on any property beyond your Main residence has been penalised to date with an additional 3% stamp duty cost. This now rises to 5%, so a 40% increase and another step to disincentivise ownership of 2nd homes.
- Example A: now £37,500 stamp duty to purchase a £500,000 holiday home, compared to £27,500.
- Example B: now £91,250 stamp duty to purchase a £1,000,000 holiday home, compared to £71,250.
- Stamp Duty on any property beyond your Main residence has been penalised to date with an additional 3% stamp duty cost. This now rises to 5%, so a 40% increase and another step to disincentivise ownership of 2nd homes.
- Capital Gains Tax
- Increased with immediate effect to 18% and 24% on all assets, from 10% and 20%.
- Not as bad as previously expected. The higher rate of 24% is still lower than it was this time last year (28%) for residential property. This supports the governments preference for motivating second home owners to make property available to others.
- These higher rates were previously reserved for residential property transaction but now apply to all.
- Business Asset Disposal Relief offers a reduced rate of CGT of 10% on disposals of business assets up to a lifetime allowance of £1 million. From 6 April 2025, the rate of CGT will increase to 14% and from 6 April 2026 to 18%, on disposals up to £1 million.
- Increased with immediate effect to 18% and 24% on all assets, from 10% and 20%.
- Inheritance Tax
- From April 2026, Business Property & Agricultural Property Reliefs to be limited to combined £1m per estate (also applies to EIS and other qualifying investments).
- It appears a couple can gain ‘double-benefit’ by the first person leaving £1m of Business or Agricultural assets to descendants, and the rest to spouse (nil tax), allowing the survivor to also claim a second £1m tax-free. Will need careful monitoring of estate planning and adjustments to Wills.
- AIM investments to be charged inheritance tax at 50% of main rate (effective rate of 20%).
- The Non-dom tax regime is to be replaced by a residence based scheme so that those making the UK their home pay taxes here.
- From April 2026, Business Property & Agricultural Property Reliefs to be limited to combined £1m per estate (also applies to EIS and other qualifying investments).
- Private Schooling
- VAT to be applied to private education fees and a removal of business rates charitable relief in England.
Pensions & Savings:
- No changes to pension tax-free-cash entitlement
- As expected, albeit rumours were allowed to run up until the Budget and many took rushed action.
- The State Pension triple lock will remain in effect
- Good news for retirees but we do believe it will be changed to ‘inflation-linked’ at some point, as it remains unsustainable.
- ISA allowances remain unchanged at £20,000, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs.
- More good news – we expected these to reduce as a stealthy approach to increasing CGT.
- British ISA consigned to the bin.
- Pension funds to be included within estates for inheritance tax calculations from April 2027 (consultation opened on the detail & mechanics).
- Bad news. The detail that has been announced so far would be a terribly harmful way to introduce this sudden change. This exposes individuals who have diligently saved to provide for their unknown costs in later life with a double-tax hit from inheritance tax, followed by income tax on the remainder, so an effective 64% tax if the beneficiaries (children etc) are higher-rate-taxpayers.
- We will input to and monitor the consultation closely.
- If this is implemented, it’s a significant change that will mean there is new advice, depending on your personal situation, for how and when we use money in personal/workplace pensions to fund your lifestyle and legacy planning.
Living Costs:
- The National Living Wage for adults over 21 is to increase to £12.21 an hour, £23,810 for a 37.5 hour week.
- Carers Allowance weekly earnings limit is now £195.36 meaning that those carers with earnings below this figure qualify for an additional £81.90.
- Air passenger duty for short haul economy flights increase by £2, long haul by £12 each way, private jet passengers see a 50% rise.
- Fuel duty will remain frozen for another year.
- Alcohol duty will increase by RPI except draught products that reduce by 1p a pint.
Our guide to the Autumn Budget offers a full breakdown of this momentous moment in our tax system.
Take a moment to read our guide and reflect on the changes & opportunities which may impact you and your family.
We have identified financial planning ‘threats and opportunities’ and will raise anything which may change your financial plan when we next meet. In particular, we will input to and monitor the consultation on the pension treatment on death.
If there is anything in particular you would like to discuss, please contact your lead planner.
To download our full guide, click the image below:
