First Labour's budget since 2010. What are the key points
Income and personal taxes: In keeping with pre-election promises, there will be no changes to the current bands or rates for income tax, primary Class 1 NI, Class 4 NI or dividends.
An unexpected announcement is that the personal tax thresholds will unfreeze from April 2028. It was rumoured that the current rates would be locked in for a further two years. Instead, they will now increase annually, likely in line with CPI.
For employees with company-provided cars, the percentage for zero emission and electric vehicles will increase by two percentage points per year in 2028 to 2029 and 2029 to 2030, rising to 9% in 2029 to 2030.
The domicile status will cease to apply for income tax and capital gains tax (CGT) as planned.
Business taxes: A leaked increase in the rate of secondary Class 1 NI was confirmed, with the rate increasing to 15% from April 2025.
This was coupled with a reduction in the payment threshold to £5,000 (£96.15 per week). However, to ensure this doesn’t adversely impact smaller employers, the employment allowance will increase to £10,500 – more than double its current level.
Despite significant criticism, the previously-announced application of VAT to private school fees will go ahead. Further details should be available soon.
Capital taxes: The two-tiered system of CGT rates will be retained, but the rates are increased with immediate effect to 18% and 24%, aligning the rates applicable to assets generally with those for residential property.
The trust rate increases to 24% accordingly. This applies to disposals made on or after 30 October 2024. The rate applying to carried interest will increase to 32% from April 2025, with further reform promised.
The rate that applies to business asset disposal relief and investors’ relief is increasing to 14% for disposals made on or after 6 April 2025 and from 14% to 18% for disposals made on or after 6 April 2026.
The lifetime limit for investors’ relief reduces to £1 million (from £10 million) for disposals made on or after 30 October 2024.
Inherited pensions will be brought within inheritance tax from April 2025.
Other taxes: The stamp duty land tax surcharge for purchases of additional dwellings increases to 5% (from 3%) from 31 October 2024. This also increases the rate paid by companies and other non-natural persons to 17% for residential properties over £500,000.
For further details contact Amin & Co Accountants at info@aminandcoaccountants.co.uk
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