Autumn Budget Announcements
The recent Autumn Budget speech brought several headline announcements, including changes to Employers’ National Insurance Contributions (NI), the removal of Non-Domiciled (Non-Dom) status, updates to Inheritance Tax (IHT), and significant adjustments to Capital Gains Tax (CGT). However, beyond these major points, there were additional details and clarifications that may have escaped the headlines. Our Senior Corporate Tax Manager, Mason King, has reviewed the Treasury document and highlighted key updates that could affect businesses and individuals. Here’s what you need to know:
Changes to Capital Gains Tax (CGT) Rates
Detail of the significant changes to CGT rates that were announced in Rachel Reeves’ budget speech are to be as follows:
- An increase to 18% and 24% main rates for disposals made from 30 October 2024 (i.e. effective immediately).
- Business Asset Disposal Relief and Investors’ Relief rates will increase to 14% from 6 April 2025, rising further to match the lower main rate at 18% from 6 April 2026, reducing the effective “tax saving” of these relief’s compared to the main rates of Capital Gains Tax as they now stand. These changes will be legislated in the upcoming Finance Bill 2024-25.
Close Company Loans to Shareholders
Starting 30 October 2024, the government will tighten rules to prevent shareholders from extracting funds untaxed from close companies. This will involve legislative changes to close loopholes in the anti-avoidance rules of the loans to participators regime.
Increased Interest Rates on Unpaid Tax Liabilities
In Rachel Reeves’s speech it was announced that interest rates on late paid tax will be increasing. It has since been confirmed that this increase will happen effective 6 April 2025, and that HMRC will increase the late payment interest rate on unpaid tax liabilities by 1.5 percentage points. This move emphasises the importance of timely (or early!) tax payments to avoid higher interest.
Cryptoasset Reporting Framework
The Treasury will extend the Cryptoasset Reporting Framework (CARF) to UK users, ensuring comprehensive reporting for tax purposes. Draft regulations are set to be included in the Finance Bill 2024-25, bringing greater transparency to this growing sector.
Reduction in Investors’ Relief Lifetime Limit
The lifetime limit for Investors’ Relief will be reduced to £1 million for qualifying disposals from 30 October 2024, aligning it with the limit for Business Asset Disposal Relief.
Stamp Duty Land Tax (SDLT) Adjustments
From 31 October 2024, the Higher Rates on Additional Dwellings (HRAD) surcharge will rise by 2 percentage points, from 3% to 5%. This increase aims to support primary home buyers over investors and non-UK residents, potentially boosting transactions for first-time buyers.
The company higher rate of SDLT has also increased from 15% to 17% effective 31 October 2024 for property worth in excess of £500,000, although the existing relief’s continue to be available.
New Tax Treatment for Double Cab Pick-Up Vehicles
Double cab pick-up vehicles (DCPUs) with a payload of one tonne or more will be treated as cars for tax purposes starting 1 April 2025 for Corporation Tax and 6 April 2025 for income tax. Transitional rules will allow existing buyers to maintain the current treatment until 5 April 2029 or until the vehicle is disposed of or its lease expires.
Reforms and Updates on R&D Tax Reliefs
The government aims to improve the administration of R&D tax reliefs, with a potential consultation on broadening advance clearances in spring 2025. This follows measures to address error and fraud in the R&D claims process.
No significant change was otherwise announced for R&D tax relief’s and the new “merged” scheme will continue to exist with the same rates of relief.
High Income Child Benefit Charge (HICBC) Simplification
The proposed reform to base the HICBC clawback on household income and not just the income of the “highest earner” will not now proceed due to fiscal concerns. This means that the existing rules on HICBC being clawed back when the highest earner earns between £60,000 and £80,000 adjusted net income will continue to apply and the thresholds will not increase.
To ease administration and reporting of the HICBC, employed individuals will be able to pay their HICBC through their tax code starting in 2025, and Self-Assessment returns will be pre-populated with relevant Child Benefit data.
Strengthening the Tax Advice Market
The government is reviewing feedback from its consultation on raising standards in the tax advice market. It is considering options to bolster the regulatory framework and improve the registration of tax advisers, aiming for greater integrity and client protection.
These updates highlight significant legislative and procedural shifts that could impact tax planning and financial strategies. At Plus Accounting, we are here to guide you through these changes and help you adapt effectively. If you have any questions or would like tailored advice on how these updates may affect you or your business, please reach out to our team.
You can read the Budget Summary Report here.
Author: Mason King, Senior Corporate Tax Manager
Any views or opinions represented in this blog are personal, belong solely to the blog owner, and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.
Date published: 31 October 2024