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AUTUMN BUDGET 2024 

We can only hope that the £70bn each year of extra spending delivers growth. To pay for this, half will come from taxes the rest from borrowing.

 
Hopefully this will not increase inflation as if it does the BoE Bank Rate may stay high.

There are 71 policy notices, here are the key ones that affect you:
 
The largest burden falls on the employers’ National Insurance (NI)
 
From 6 April 2025 the main rate of Class 1 employers NI contributions will increase to 15% from 13.8%. Also the secondary threshold will be reduced to £5,000 from £9,100 bringing more employees into the net.
 
The Class 1 employee NIC is held at 8% and 2% above £50,270.
 
Class 4 self-employed NIC has been held at 6% and 2% above £50,270.
 
Income tax
 
The personal allowances for 2025/26 will remain at £12,570 and the higher rate threshold will stay at £50,270.
 
The dividend allowance will remain at £500 for 2025/26 and the rates of tax on dividends will also be unchanged.
 
Inheritance tax (IHT)
 
The inheritance tax nil rate band of £325,000 has not changed, neither has the residence nil rate band of £175,000.
 
However business relief will be attacked from April 2026. The government has introduced a threshold of £1 million and over that limit there will 50% relief, meaning an effective rate of 20%. Investing in AIM shares the IHT relief has been also reduced to 50% and therefore will be subject to 20% IHT.
 
The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6‌‌‌ April 2027. However, as this is very complex they have started a review on how to implement it.
 
Capital gains tax (CGT)
 
The rate has been increased today to 18% from 10% for non and basic rate taxpayers and to 24% from 20% for high rate taxpayers. Bringing the gain on the disposal of shares to be in line with property.
 
The 0% SDLT band for first time and other property buyers will end on 31 March 2025.
 
The annual Capital Gain Tax exemption of £3,000 remains.
 
Stamp Duty Land Tax (SDLT)
 
The additional dwellings SDLT surcharge on second homes and buy-to-let properties has been increased to 5% from 3% from today.
 
The threshold of the 0% SDLT band for residential property will be cut to £125,000 from 1 April 2025. The 0% band for first time buyers will be reduced down to £300,000 from 1 April 2025.
 
VAT – private school fees
 
The government will introduce VAT at 20% on private school fees from January 2025.
 
ISA allowances
 
The limits have not changed. £20,000 for ISAs, £4,000 for Lifetime ISAs, £9,000 for junior ISA and Child Trust Funds.
 
Pensions
 
Income Tax relief on personal pension contributions remains unchanged. Annual allowance also remains unchanged at £60,000.
 
Tax-free lump sum allowances remain unchanged. The Lump Sum and Death Benefit Allowance of £1,073,100 and Lump Sum Allowance of £268,275 remain unchanged.
 
The 4.1% increase in state pensions will hopefully make up for the loss of the winter fuel payment.
 
Corporation Tax
 
The main rates remain at 25% and 19% for companies meeting the small profit threshold of £50,000.
 
The marriage allowance
 
This allowance has not changed. If one spouse has income below £11,310 (£12,570 – £1,260) you can transfer £1,260 of your personal allowance between couples. If you believe that you may qualify it can be back dated to 2020/21.
 
Furnished Holiday Lettings (FHL)
 
The FHL tax regime will be abolished from April 2025. The effect will be that FHL properties will be subject to the same rules as non-furnished holiday let property businesses.
 
National Living and Minimum Wage
 
From April 2025 the NLW will be increased to £12.21 and NMW for 18-20 year olds to £10 per hour.
 
High Income Child Benefit Charge (HICBC)
 
The HICBC tax charge start to be charged above £60,000. The government is not planning to reform the tax.
 
Non-UK domiciled individuals
 
From April 2025 changes will be made to replace the remittance basis of taxation with a shift to residence as the determining factor.

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Spring Budget 2024

Pensions:
 
From 2024/25, the following key points apply:

  • Annual Allowance remains at £60,000.
  • Money Purchase Annual Allowance remains at £10,000 with no carry forward.
  • The Life Time allowance has been abolished but this has increased complexity – this only affects you if you have over £1,000,000
  • Lump Sum Allowance (LSA) of £268,275 – covers tax-free cash.
  • Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 – covers the totality of lifetime tax-free cash, severe ill-health lump sums and tax-free death benefit lump sums on death under age 75.
  • Excess amounts over the LSA and LSDBA are taxed as income.
  • Separate Overseas Transfer Allowance of £1,073,100, with a 25% overseas transfer charge applying to the excess in situations where this charge isn’t triggered in its own right.
  • A range of transitional protections are in place. Annual Allowance – No changes were announced to the various Annual Allowances for 2024/25. For the Tapered Annual Allowance, the Threshold Income limit remains £200,000, the Adjusted Income limit remains £260,000 and the minimum allowance remains £10,000.

 
ISA’s:
 
As previously announced, the Government will reform the Individual Savings Accounts rules with effect from April 2024, including:

  • Permitting multiple subscriptions to ISAs of the same type every year.
  • Permitting partial transfers of ISA funds in-year between providers.
  • Removing the requirement to reapply for an existing dormant ISA.
  • Making technical changes to the rules for the permitted investments.
  • UK ISA consultation The Government has now announced a consultation on a new UK ISA, with an additional £5,000 subscription limit in addition to the existing £20,000 allowance. The consultation closes on 6th June 2024.

 
Taxation:
 
National Insurance:
 
With effect from 6th April 2024,

  • The main rate of employee Class 1 National Insurance Contributions (NICs) payable on earnings between £12,570 and £50,270 reduces from 10% to 8%.
  • This follows the previous reduction from 12% to 10% with effect from 6th January 2024.
  • There are also changes for self-employed people, with effect from 6th April 2024:
  • The main rate of Class 4 NICs now reduces from 9% to 6% for those with profits between £12,570 and £50,270 in 2024/25 (it was previously announced that the reduction would be from 9% to 8%).  
  • As previously announced, the requirement to pay Class 2 NICs ends for most self-employed people – State Pension entitlement will be linked to Class 4 NICs.
  • Self-employed people with profits between £6,725 and £12,570 will continue to get NI credits to build State Pension entitlement.
  • Self-employed people with profits below £6,725 can continue to pay voluntary Class 2 NICs at the current rate of £3.45 per week in 2024/25 to build State Pension entitlement. 


Capital Gains Tax:
 
With effect from 6th April 2024,

  • The higher rate of Capital Gains Tax (CGT) for residential property disposals not qualifying for Private Residence Relief will be cut from 28% to 24%.
  • The lower rate will remain at 18% for any gains that fall within an individual’s Basic Rate Band.
  • As previously announced, with effect from 6th April 2024 the CGT Annual Exempt Amount reduces from £6,000 to £3,000.

Big change for families with young kids:

High Income Child Benefit Charge – The income threshold at which the High Income Child Benefit Charge (HICBC) starts to be charged will increase from £50,000 to £60,000 from 6th April 2024. In addition, the rate at which the HICBC is charged will also be halved from 1% of the Child Benefit payment for every additional £100 earned above the threshold, to 1% for every £200. This means Child Benefit will not be withdrawn in full until individuals earn £80,000 or higher. The Government plans to administer the HICBC on a household rather than an individual basis by April 2026, and will consult on this in due course

Other areas of Note:

VAT:

The threshold for VAT registration has been increased to £90,000 from £85,000.

Income Tax:

No changes in bandings here until 2028, creating an ‘inflation tax’ on earnings going forward until 2028.

If you are able to use the marriage allowance and did not think is was worthwhile. You will now be able to backdate to 2019/20, but you will need to get your skates on as you only have until 5th April 2024.


Non-domiciles:

The Government has announced it will abolish the current tax regime for non-UK domiciled individuals (non-doms) from 2025/26.
Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-tax resident for the last 10 years. This new regime will commence on 6th April 2025 and applies UK-wide.
The following transitional arrangements will be introduced for existing non-doms claiming the remittance basis:  An option to rebase the value of capital assets to 5th April 2019. A temporary 50% exemption for the taxation of foreign income for the first year of the new regime (2025/26). • A two-year Temporary Repatriation Facility to bring previously accrued foreign income and gains into the UK at a 12% rate of tax.
Scottish taxpayers who pay higher rates of income tax than in the rest of the UK can also benefit from higher rates of tax relief on member pension contributions.

Other areas of note

The Chancellor has made a few changes to reduce the level of tax for working people. However, to balance the books he has changed the ‘Furnished Holiday Lettings tax regime’ and ‘Multiple Dwellings Relief’ and added a new duty to vaping and increased tobacco duty. Natwest: The Government has previously pledged to launch a retail share offer for NatWest, giving ordinary investors a chance to buy a chunk of the bank, which remains partially under state ownership. The Chancellor signalled this could happen in the summer ‘at the earliest’, declining to set a clear timetable for the sale. 

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Autumn Budget 2023

Out of the 110 changes in the Autumn Statement here are highlights:

Pensioners will enjoy a 8.5% pension boost from April 2024 to £221 per week. The old pension will also increase to £169 from £156 per week.

Class 1 employee NIC is to be cut down from 12% to 10% from 6th January. If you use salary sacrifice to top up your pension you may wish to review your payments.

For the self-employed, Class 2 will be abolished from April 2024. Plus Class 4 will drop from 9% to 8%. If your self-employed earnings are below £6,725 you may wish to continue to pay Class 2 to build up NI credits.

Rules on having multiple lSAs has been relaxed to make administration easier from April 2024.

Income tax allowances and dividend rates have not changed. Also corporation and Vat tax rates were not changed. Neither was IHT affected. The point that additional income tax rate comes into effect will stay at £125,140.

The Income Tax Self-Assessment (ITSA) form for PAYE employees, will not be required after April 2024.

Guidance on training costs for the self-employed is being reviewed to provide more clarity on what is deductible.

The government has confirmed that the pension lifetime allowance will be scrapped from pension rules from April 2024.

Please also remember to keep your Will up-to-date and advise your executer where the original is kept. Also if your beneficiaries have changed please review whether your pension ‘expression of wishes’ needs updating.

N.B. This information is based on announcements made in November 2023 Autumn Statement which may change before becoming law.

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Spring budget 2023

Let’s hope that the chancellor’s budget keeps us out of a technical recession even if it feels like one. There are also a number of initiatives to encourage people back to work and hopefully ‘inflation’ will continue to come down.
 
Most allowances and rates were not changed in the budget, so I will not repeat them here.
 
Pensions

  • The Life Time Allowance (LTA) charge on a pension of £1,073,100 has been removed
  • The maximum tax free lump sum without LTA protection is fixed at 25% of £1,073,100 (£268,275)
  • If you have LTA protection you can now top-up your pension again
  • The pension annual allowance on contributions has been increased to £60,000 up from £40,000 from April
  • For additional rate tax payers, the taxable ‘adjusted income threshold’ has been increased to £260,000. However, the ‘threshold income’ figure is to remain at £200,000.
  • If you have started to take an income from your pension and then go back to work you are now allowed to reinvest £10,000, up from £4,000 (The Money Purchase Annual Allowance).

Voluntary NI contributions – If you have not started taking your state pension please check to see if you have any gaps in your contribution history via the government gateway https://www.gov.uk/log-in-register-hmrc-online-services . You require 35 years to receive a full pension and it is probably worth topping up if you are short. Before you hand over any money it might be an idea to check that its worth topping up by calling the Pensions Centre helpline 0800-731-0175.

The annual CGT exemption is to be cut to £6,000 from £12,300 in April. So please review your investments to see if you need to crystallise any gains and do this before 5th April.

The dividend tax allowance also goes down to £1,000 from £2,000 after April.

The Income tax free personal allowance of £12,570 and higher tax threshold of £50,270 are frozen until  2028. The 45% additional rate tax threshold will be lowered to £125,140 from £150,000 after April.

Please remember that if you are retired and one of you has a taxable income below £12,570, the marriage allowance allows you to transfer £1,260 to the other partner. Potentially saving £250 per year. If you have not claimed before, you can backdate it to 2018.

Additional childcare support will be phased in to help young families over the next 2 years.

The ‘Energy Price cap’ has been extended for 3 months. But please note that the government’s Energy Bill Support Scheme payment of £67 per month will end at the end of March.

The government have announced the Returnship initiative for the over-50s who want to retrain.

If you are affected by child benefit tax charge, this might be helped by topping up your pension to reduce your taxable income.

It might be an idea to top up your wine cellar as average duty will increase by 44p per bottle in August. At least the tax on a pint pulled in a pub has been frozen under the ‘Brexit Pubs Guarantee’.

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Autumn Statement 2022 – summary

There were a number of changes, here goes: 

  • Tax allowances and thresholds will be frozen until April 2028. You can still earn up to £12,570 and not pay any tax and then 20% basic rate tax up to £50,270.
  • The income tax additional rate threshold has been reduced down to £125,140 from £150,000. Therefore earnings from: £50,270 to £100,000 the rate of income tax is 40%, from £100,000 – £125,140 the marginal rate goes up to 60% (due to the allowance being removed) and then 45% above £125,140.
  • The CGT annual exemption will be reduced down to £6,000 from £12,300 from April 2023. It will be reduce down further to £3,000 in April 2024. The rates will stay at 10% and 20% for a basic and higher tax payer accordingly. (18% and 28% for gains on property respectively).
  • The dividend allowance will be halved down to £1,000 from £2,000 in April 2023 and halved again in 2024. The dividend tax rates will remain at 8.75%, 33.75% and 39.35% for basic, higher and additional rate taxpayers respectively.
  • One positive announcement for pensioners is that the triple lock will be maintained guaranteeing a 10.1% CPI-based increase for next April.
  • The changes in National Insurance (NI) that were implemented this year have been scrapped and they are now kept in line with the annual personal allowance of £12,570. Class 1 employees pay: 2% between £9,100 and £12,570, 12% between £12,570 and £50,270. Employers pay 13.8% above £9,100. The lower earnings limit will be frozen at £6,240.
  • Corporation tax will rise to 25% as originally planned in April 2023. 19% for profits below £50,000 and tapering up to £250,000. The Annual Investment Allowance of £1m has been made permanent. Also allowances for electric vehicle charge points have been extended to 2025.
  • Increases have also been made to the Seed Enterprise Investment Scheme and also to Company Share Options Plans.
  • The government will help out with your energy bills by paying £400 over the next 6 months (starting with £66 this month) directly to your energy supplier.
  • The chancellor kept the changes to Stamp Duty Land Tax. The residential nil rate tax threshold was kept at £250,000. The threshold for First Time Buyers was increased to £425,000 from £300,000, with the maximum increased to £625,000. 
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Min-Budget

Well the mini-budget was certainly a fiscal event. You have probably been inundated with commentary, but we will attempt to summarise it for you.

Globally a shift is taking place as we transition from an era of disinflation to a world of inflation and therefore higher interest rates. At the same time the picture is complicated by supply chains being modified to compensate for geopolitical challenges. Central banks only really have one weapon and that is raising rates to remove liquidity from the markets.
 
The government wants to stimulate growth. It has already announced the Energy Price Guarantee (EPG), capping the unit price for households and the Energy Bill Relief Scheme for non-domestic energy customers.
 
It is also trying to put more money in our back pockets with the following:
 

  • The Health and Social Care Levy Act provided a temporary increase in National Insurance contributions (NIC). This has been reversed and will come into effect on 6 November 2022.
  • The reduction in income tax to 19% from 20% scheduled for April 2024 has been brought forward to April 2023.
  • The residential nil rate tax threshold (stamp duty) is increased to £250,000 from £125,000 and for first time buyers £425,000 (£625,000 max) from £300,000.
  • The dividend ordinary rate will be reduced back down to 7.5% and the upper rate back down to 32.5% from April 2023.
  • Corporation tax will not rise and will stay at 19%.
  • The Annual Investment Allowance (AIA) will not be reduced in April 2023.
  • Investment Zones to be established and Enterprise Investment Schemes expanded.
  • If you have been affected by the change in IR35 this has also been reversed.

However, the Chancellor did not handle the announcements well. He started by dismissing the Permanent Secretary to the Treasury. The Office of Tax Simplification will be closed. He also did not ask the Office of Budget Responsibility (OBR) to review the announcements (therefore it is not really a budget) and then announced that there were ‘more cuts to come’.

The markets did not like the uncertainty and promptly sold Sterling and increased the cost of government borrowing by selling UK government bonds (gilts).  This then affected the defined benefit pension industry as the cost of liability matching pensions using derivatives increased. The pension industry then needed to increase the amount of capital (margin) to pay for the increase. This created a vicious recursive circle. The Bank of England (BoE) then stepped in to prop up the gilts market.

Going forward, the BoE only increased the bank rate by 0.5% to 2.25% on 22 September 2022. The next meetings are on 3 November and 15 December. There is a high probability that rates will go up on both dates. This will of course affect mortgage rates and if you are worried give Alastair a call in the office.

It looks like the Chancellor will be trying to balance the books. Simon Clarke, the new levelling up secretary has written to Whitehall departments asking them to ‘trim the fat’ and tackle the ‘very large welfare state’.

The Government’s strategy seems to be based on ‘Reaganomics’ from the 1980s. There will be more volatility in the markets for the foreseeable future; however this is normal market mechanics adjusting to the new regime. We are coming into the Q3 earning season but our companies will be able to pass through the increase in input costs from the energy rises feeding inflation price rises.

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Autumn Budget 2021

The chancellor focused on the post covid recovery and did not tinker much with pensions and investments.

The key measure that we already knew about was the 1.25% increase to National Insurance and Dividend rates which will come into effect in April 2022. Due to Government IT constraints it will initially be collected via NI and in April 2023 it will be a separate tax called the ‘health and social care Levy’.

This Levy will be applied if your pay is above the primary earnings threshold of £9,568. You are caught if you pay yourself dividends above £2,000, and if you are working above the State Pension age.

Therefore the dividend ordinary rate, upper rate and additional rate will increase to 8.75%, 33.75% and 39.35% respectively.

For business owners the employer NI will also rise 1.25% to 15.05%. As corporation tax will rise in April 2023 it would be prudent to talk to your accountant to bring forward profits if possible.

Key allowances have not changed:

  • High rate income tax band starts at £37,700 + £12,570 = £50,270
  • Capital Gains Tax annual exempt amount is £12,300
  • ISA annual subscription limit is maintained at £20,000 and JISAs £9,000
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Budget 2021 – details

The Chancellor of the Exchequer Rishi Sunak has announced that the bill for addressing the coronavirus pandemic is currently £407bn, which is equivalent to 10x HS2 projects or 20 Crossrail’s.
 
Tax thresholds

The key financial changes announced in the budget are as follows: 
The basic rate income tax threshold has been slightly increased from April 2021 to £12,570 from £12,500 and the high rate threshold to £50,270 from £50,000. The thresholds will then stay at these levels for the following 5 years.
 
The inheritance tax nil-rate band will remain at the existing level of £325,000 and also the residence nil-rate band of £175,000 until at least 2026. The residence nil-rate band taper will continue to start at £2 million.
 
The capital gains annual exempt amount has also been frozen at £12,300 until 2026.
 
Dividends also escaped. The tax-free dividend allowance has been kept at £2,000.
 
Pensions
 
The pension lifetime allowance has also been frozen at £1,073,100 until 2026.
 
The state pension will however rise by 2.5% next tax year and the triple lock will remain in place.
 
Property
 
The 0% stamp duty land tax holiday on the first £500,000 has been extended until 30 June 2021. The threshold will then be reduced down to £250,000 for a further 3 months and then return back to £125,000 from October.
 
Lenders have been withdrawing from providing low-deposit mortgages. Therefore to help first time buyers the government is guaranteeing 95% loan-to-value mortgages up to £600,000.
 
Companies
 
From April 2023 corporation tax will increase for companies with profits above £50,000. Tapering from 19% up to 25% above £250,000. This will affect the UK companies, but as it is progressive and can be offset by ‘super deduction’ on business investment as companies investing can benefit from a 130% first-year capital allowance.
 
IR35 changes delayed from last year will go ahead in April 2021. Companies must now collect income tax and NIC from the contractor’s fee and pay it over to HMRC.
 
The furlough scheme will be extended until October 2021. However, employers will be asked to contribute 10% in July and increased to 20% in August.
 
The trading loss carry-back rule has also been extended from the existing one year to three years.
 
The VAT reduction for the UK’s tourism and hospitality sector has been extended until October 2021 and reduced rate of 12.5% will then be applied until April 2022.
 
Business rate reliefs have also been extended to July 2021 and then a reduced rate of 66% until April 2022.

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Budget 2020

We have summarised Mr Sunak the new Chancellor’s 2020 budget for you.

  • National Insurance (NI) threshold raised to £9,500 up from £8,632
  • Pension taper increased to £200,000 from £110,000 – this helps pension funding restrictions
  • Junior ISA annual limits increased to £9,000 from £4,368. Adult limit remains at £20,000.
  • In the UK the income tax rates and allowances remain at £12,500 for the personal allowance and £50,000 the higher rate threshold
  • The Capital Gains Tax (CGT) allowance has increased to £12,300 for individuals
  • The Inheritance Tax (IHT)  residence nil rate band increases to £175,000 taking the overall IHT allowance up to potentially £500,000 per person
  • Entrepreneurs Relief lifetime allowance reduced to £1million
  • Off-payroll working rules (IR35) reform still scheduled for April 2020
  • Corporation tax rate to remain at 19%
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Do you have any NI gaps?

Paying out for voluntary National Insurance contributions now could improve your state pension by up to £4,000 – but it’ll cost more if you wait until after 5 April 2019.

Anyone who reaches state pension age after 5 April 2016 and has a gap in their NI payments between the 2006-07 to 2015-16 tax years has until April 2023 to ‘plug’ the holes by making voluntary contributions. In the new tax year, the amount you pay for voluntary National Insurance (NI) will increase to a more expensive flat rate for all tax years. But, if you pay between £600 and £700 – the equivalent of £100 a week between now and April – you could pay off a missing year in your NI record and secure thousands of pounds of state pension when you retire.