The new Chancellor of the Exchequer, Rachel Reeves, has delivered the Labour government’s first budget since being elected earlier this year. Unveiling her plans, the Chancellor spoke of the need to “restore stability” to the economy and “deliver change” with an “economy that is growing”.

We have picked out some of the key announcements that may be of interest.

Employers’ National Insurance Contributions

From April 2025, the rate of Employer’s National Insurance will increase from 13.8% to 15% and the point at which employers pay National Insurance will be reduced from £9,100 to £5,000 per year.  However, in a bid to support smaller businesses with this change, the Employment Allowance will be increased from £5,000 to £10,500 per year.

National Minimum Wage

The National Living Wage is set to increase to £12.21 an hour from April 2025 for workers aged 21 and over. Plans to move towards a single adult rate will be progressed by initially raising the National Minimum Wage for 18 to 20-year-olds to £10 an hour.

Capital Gains Tax

The announcement of changes to Capital Gains Tax legislation had been widely anticipated prior to the Autumn Budget. Effective immediately, the lower rate of Capital Gains Tax has been increased from 10% to 18% and the higher rate from 20% to 24%.

Business Asset Disposal Relief

Business Asset Disposal Relief and Investors Relief will rise to 14% from April 2025 with a further rise to 18% from April 2026.

Inheritance Tax

The Inheritance Tax threshold has been frozen for a further two years, until 2030. From April 2025, Inheritance Tax business reliefs will restrict full relief to the first £1 million of combined agricultural and business assets, with 50% relief on assets beyond this. Inherited pensions will also be considered estate assets from April 2027.

Income Tax

Income tax thresholds remain frozen until April 2028. From 2028-29, these thresholds will be uprated with inflation.

Stamp Duty Land Tax

There had been speculation about possible changes to Stamp Duty Land Tax and this was confirmed. The Stamp Duty Land Tax surcharge on second homes increased from 3% to 5% from 31 October 2024.

VAT

As expected, the Chancellor confirmed that VAT would be introduced on private school fees with effect from January 2025.

Reforms the taxation of non-UK domiciled individuals

From 6 April 2025, the current rules for the taxation of non-UK domiciled individuals will end, being replaced by a system based on residence.

Child Benefit

While the Chancellor made no reference to child benefit in her speech, the Budget document states that the proposed change to basing claims on household income has been abolished due to the costs associated with implementation.

If you’d appreciate some guidance as to how the budget might affect you or your business, please do get in touch. We’d be more than happy to help!