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2024 Budget: Key changes and the implications for individuals and businesses

Today, Chancellor Rachel Reeves delivered her Budget speech, representing the Labour Government's first fiscal announcement in 14 years. This wide-ranging address focused on economic growth and financial responsibility, introducing significant changes to tax policies and government borrowing strategies.

Key changes in the 2024 Budget:

  • Tax increases: The Chancellor plans to raise taxes by £40billion; one of the largest raises to tax levels in UK history. This includes increases in employer National Insurance contributions, affecting businesses financially by raising the rate from 13.8% to 15%, with payments starting at a lower salary threshold of £5,000 instead of £9,100.
  • Capital Gains Tax rates hike: Rates are set to increase from 10% to 18% for the basic rate and 20% to 24% for the higher rate.  There are no changes to be made to residential property Capital Gains Tax, which will remain at 18% and 24%.
  • Inheritance Tax Threshold: The freeze on the Inheritance Tax threshold is extended to 2030, maintaining the current tax-free allowance at £325,000.
  • Stamp Duty Land Tax (SDLT): The tax payable on residential properties will increase to 5% for second homes with almost immediate effect from Thursday 31st October 2024.
  • Agricultural Property Relief: This will still apply to the first £1million of combined business and agriculture assets attracting no Inheritance Tax, however for assets above £1million, Inheritance Tax will apply with a 50% relief at an effective rate of 20% from April 2026.
  • Adjustments to business rates: The 75% business rates discount, initially set to expire in 2025, will be replaced by a 40% discount, limited to a maximum of £110,000.
  • Increases in living and minimum wages: The national living wage will rise to £12.21 per hour for those over 21, while those aged 18-20 will see their minimum wage increase to £10 per hour.
  • Fuel and alcohol duties: Fuel duty will remain frozen, continuing the existing 5p cut for another year, while a duty cut on draught alcohol provides minor relief to hospitality businesses.  Alcohol duty rates on non-draught drinks will increase in line with RPI from February 2025.

Despite some measures to stimulate economic growth, the Office for Budget Responsibility (OBR) has expressed a cautious outlook. The economy is expected to grow by just over 1% this year, an increase to 2% in 2025, followed by a decline to around 1.5%. This forecast suggests that businesses and individuals need to prepare for economic fluctuations and potential challenges.

Gareth Horner, Managing Partner, commented, “It is clear that these are ambitious measures introduced in this Budget, intended to address economic challenges while providing more funding for the NHS, the education sector and the Armed Forces. Following media speculation in recent weeks, the announcement does not bring drastic changes to areas such as Council Tax, as expected, however, the mixed reactions from the OBR highlight the need for cautious optimism. Businesses and individuals should proactively review their financial plans, particularly in relation to estate planning for individuals and payroll strategies for employers.  Along with the Employment Rights Act introduced recently, employers in particular are in for significant changes in the coming months and having robust plans in place is the best way to protect employment and economic stability.”

To discuss your plans for the future in relation to your estate, your business or your employees, you can contact a member of the team by emailing info@parkerbullen.com or calling your local office below: