Autumn Budget 2024 Overview
The 2024 Autumn Budget introduces several key changes as the Chancellor seeks to close the “funding gap” while also aiming to support public services and stimulate economic growth. The impact of the Chancellor’s announcements on businesses, employment, and wages will become clearer in the coming months.
With major decisions on taxation and public spending now outlined, it is hoped that businesses and households will experience greater stability and certainty in the years to come.
Pensions
A significant update for pensions relates to inheritance tax. While many will still see their estates remain below inheritance tax thresholds, others may have structured their retirement planning based on different expectations of how their wealth would be taxed. We will review and adjust our approach to estate planning and income withdrawals at our regular meetings.
Pension Death Benefits
From 6 April 2027, inheritance tax will apply to inherited pension death benefits regardless of who selects the beneficiaries. The government will consult on these changes, with discussions continuing until late January 2025.
State Pensions
The triple lock remains intact. In April 2025, the Basic State Pension, new State Pension, and Pension Credit minimum guarantee will increase by 4.1% to match September 2024’s earnings growth:
- The new State Pension will rise by £474.85, totaling £12,016.75 annually.
- The Basic State Pension will increase by £361.40, reaching £9,175.40 annually.
Income Tax
The personal allowance will stay at £12,570, frozen until 2028, with tax rates for the UK (excluding Scotland) as follows:
- Basic rate: 20% on the first £37,700 above the personal allowance.
- Higher rate: 40% on income over £37,700 plus the personal allowance.
- Additional rate: 45% on income over £125,140.
Income tax rates for Scottish taxpayers will be revealed in December’s Scottish Government budget.
National Insurance
Employee Contributions
Labour has pledged not to increase employee National Insurance contributions. From 6 April 2025, rates will remain:
- Class 1: 8% on earnings between £12,570 and £50,270.
- 2% on earnings above £50,270.
Employer Contributions
Starting 6 April 2025, employer Class 1A and 1B National Insurance contributions will rise from 13.8% to 15% on earnings over £5,000. The Secondary Threshold will decrease to £5,000 annually. Additionally, the Employment Allowance will increase from £5,000 to £10,500, providing relief for smaller employers with National Insurance contributions under £100,000.
Savings
Individual Savings Account (ISA)
From 6 April 2025, ISA subscription limits remain unchanged:
- Adult ISA: £20,000
- Child Trust Fund and Junior ISA: £9,000 each
- Lifetime ISA: £4,000
British ISA
The proposed British ISA will not proceed due to mixed feedback from the consultation in March 2024.
Inheritance Tax
The nil-rate band (£325,000) and residential nil-rate band (£175,000) are frozen until April 2030. From 6 April 2026, individuals can leave up to £1 million in combined business and agricultural assets to heirs without inheritance tax, with amounts above this taxed at 20%. Starting 6 April 2025, inheritance tax will shift from a domicile-based to a residency-based system.
Trusts
Currently, if a settlor of a trust who was non-domiciled becomes a UK resident, certain protections apply. As of April 2025, this protection will no longer be available for trusts where the settlor has resided in the UK for ten years.
Capital Gains Tax
Effective 30 October 2024, the lower capital gains tax rate will increase from 10% to 18%, and the higher rate will rise from 18% to 24%, aligning these with the rates for residential property.
