Autumn Budget highlights: key tax changes and what they mean for you
The 2024 Autumn Budget has introduced significant changes in key tax areas, impacting Capital Gains Tax (CGT), Inheritance Tax (IHT) and the non-domiciled tax regime. Here's a breakdown of the updates and how they might affect your estate planning.
Further details will be announced by the Government in due course and we will continue to follow these with interest so we can provide you with the best possible advice.
Capital Gains Tax (CGT)
In a notable adjustment, Capital Gains Tax rates will rise as follows:
- The lower CGT rate will increase from 10% to 18%.
- The higher CGT rate will increase from 20% to 24%.
However, CGT rates on property remain unchanged, holding steady at 18% for basic-rate taxpayers and 28% for higher-rate taxpayers. These new rates highlight the importance of proactive estate planning, particularly for those involved in significant asset transfers, property sales or restructuring estates including the gifting of assets.
Inheritance Tax (IHT)
The Budget has also frozen Inheritance Tax thresholds until at least 2030, impacting estate planning for many individuals. Additionally:
- Inherited pensions: From April 2027, inherited pensions will now fall within the IHT net, adding a new dimension to pension planning for families.
- Agricultural and business relief: Changes are set to take effect from April 2026, where the first £1 million in qualifying assets will remain exempt. However, amounts beyond this will see a 50% reduction in the applicable tax rate, bringing the rate down to 20% instead of the usual 40%. Alternative Investment Market (AIM) assets will also benefit from a similar reduction.
These changes emphasise the importance of strategic planning for estates involving significant agricultural, business or AIM investments.
Other notable tax changes
- Non-dom tax regime: The non-domicile (non-dom) tax regime is set to be abandoned by April 2025. This will be replaced by a residency test, altering tax obligations for those previously classified as non-domiciled in the UK.
- Interest on unpaid tax bills: Interest rates on unpaid taxes will increase, adding urgency to efficient tax management and timely payments.
- Stamp duty land tax: For buyers of second homes, the surcharge will rise from 3% to 5%, making it more costly to invest in additional properties.
How we can help
These updates mark considerable shifts in the UK tax landscape and adapting to them can be complex. Our team is here to guide you through these changes, helping you understand the implications on your financial interests and ensuring that you stay informed and prepared.
To discuss how we can support you in navigating the new tax landscape and protecting your assets, contact personal law partner Hana Gwyn on 01423 502211 or email ku.oc1730698746.fcl@1730698746nywgh1730698746.