The UK Autumn Budget 2024 introduces several changes impacting taxpayers and businesses alike. Here’s a snapshot of the most significant updates to help you stay informed:

National Insurance Changes

1. Threshold Adjustments for Employees and Self-Employed

• Primary Threshold for Employees (Class 1 NICs): The threshold has been marginally increased, offering slight relief for employees by reducing their NIC bill.
• Lower Profits Limit for Self-Employed (Class 4 NICs): Similar to employees, self-employed individuals see a small increase in the Lower Profits Limit, which is the point at which they begin to pay NICs. This adjustment aims to support freelancers and small business owners facing rising living costs.

2. Reliefs and Allowances

• Employment Allowance: The Employment Allowance, allowing eligible employers to reduce their NIC bill, remains at £5,000. This continued relief helps smaller businesses manage rising employment costs.

3. National Insurance Contributions Rates

• Class 1 (Employees): The NIC rate that employees pay on their earnings remains the same.
• Class 2 and Class 4 (Self-Employed): The NIC rates for self-employed individuals paying Class 2 and Class 4 contributions also remain unchanged.
• Class 3 (Voluntary Contributions): Those paying voluntary NICs (Class 3) would continue to pay the same rate.

Key Takeaway: The Budget’s updates to NIC thresholds provide some relief for employees and self-employed individuals, while businesses can benefit from the Employment Allowance. As always, it’s recommended to review these changes with a tax advisor to optimize your NIC obligations.

Stamp Duty Land Tax Changes

The SDLT surcharge for second homes (including buy-to-let properties and those bought by companies) has indeed been raised from 3% to 5% for properties up to £250,000.

Additionally, the higher SDLT bands for second homes have been adjusted as follows:

• 5% for purchases up to £250,000 (as per your mention),
• 8% for properties between £250,001 and £925,000,
• 13% for properties priced between £925,001 and £1.5 million,
• 15% for properties above £1.5 million.

These adjustments reflect the government’s commitment to improving affordability for first-time buyers while using tax policy to moderate demand in the buy-to-let and second-home sectors​ this is statement is correct

National Minimum Wage and National Living Wage changes

In the Autumn Budget 2024, the UK Government announced changes to the National Living Wage and National Minimum Wage rates, set to take effect from April 2025:

1. National Living Wage Increase: The National Living Wage (NLW), which applies to workers aged 23 and over, will increase by 6.7%, moving from £11.44 to £12.21 per hour. This is projected to provide full-time workers on this wage a pay boost of around £1,400 annually.
2. National Minimum Wage for Younger Workers:
3. Ages 18-20: The rate will rise significantly from £8.60 to £10.00 per hour, marking the largest increase on record for this age group.
4. Apprentices: The minimum wage for apprentices will also rise, with an example increase from £6.40 to £7.55 per hour for 18-year-old apprentices in certain industries like construction.

This substantial pay rise aligns with the Government’s efforts to address the cost of living and aims to support the financial well-being of over three million low-income workers across the UK.

Inheritance Tax Changes

• Nil Rate Band Freeze: The nil rate band (the portion of an estate exempt from IHT) remains frozen at £325,000 until 2030. The residence nil rate band, which adds an additional £175,000 exemption when passing a home to direct descendants, also remains fixed. This freeze means more estates may become liable for IHT over time as property and asset values increase, especially in areas with high property appreciation

• Pension Fund Inclusion: Starting April 2027, unused pension funds left as death benefits will be subject to IHT, a significant change from previous rules that generally exempted pensions from IHT calculations. Now, pension assets will contribute to the estate’s taxable value, potentially incurring a 40% tax on amounts above the nil rate band. This is expected to impact around 8% of estates annually, increasing IHT receipts significantly

• Agricultural and Business Property Relief (APR and BPR): The Budget introduced a new limit of £1 million for these reliefs, which provide tax reductions for agricultural and business properties. Estates exceeding these values may face higher IHT liabilities, potentially affecting succession planning for family-owned farms and businesses

These changes aim to broaden the IHT base and raise additional revenue, particularly from high-value estates, and encourage strategic estate planning to mitigate tax impacts.

Capital Allowances Changes

In the Autumn Budget 2024, there are significant changes to Capital Allowances aimed at encouraging sustainable investments:

1. Extension of First-Year Allowances: The government has extended the First-Year Allowances (FYA) for businesses purchasing zero-emission cars and electric vehicle charging points. This means businesses can continue to claim enhanced capital allowances for such assets, promoting green investments​
2. Energy Efficiency Investments: The budget also outlines initiatives to support businesses investing in energy-efficient equipment. The changes aim to drive sustainability while supporting companies with substantial capital expenditure

These adjustments are part of the broader strategy to incentivize businesses to adopt more environmentally friendly practices while maintaining support for investment in critical sectors.

Implications for Individuals and Businesses

These updates will have mixed effects on individuals and businesses. While tax incentives and reliefs support growth and sustainability, the reduced dividend allowance and SDLT adjustments may require strategic planning for investments and cash flow management.

Final Thoughts

The latest tax changes and maximizing available reliefs can be complex. With our accounting services, we can help individuals and businesses not only comply with evolving tax laws but also optimize cash flow and minimize tax liabilities. Our team is equipped to support strategic planning, ensuring that you stay ahead of the changes from the Autumn Budget.