BPE Weighs in on the Autumn Budget 2024

Which areas of the Autumn 2024 budget will impact you the most?

BPE has weighed in on key areas that are likely to make an impact on you as an individual or a business owner.

For you:

National Minimum Wage: This will rise by 6.7% from next April. This means that the national minimum wage for those aged 21 or older will rise to £12.21; for those aged 18 and 20-years old to £10; and to £7.55 for apprentices.
Fuel Duty: This will be frozen next year and will maintain the existing 5p cut for another year.
Alcohol Duty: The duty on draft alcohol will be cut by 1p
Income tax: The current freeze on allowances is looking to end in 2028.
Capital Gains Tax: The lower rate of Capital Gains Tax will rise from 10% to 18%, and the higher rate will rise from 20% to 24%. Capital Gains Tax rates increased on carried interest to 32% from April 2025 and, from April 2026 further reforms are promised.
Inheritance Tax: The £325k nil rate band and £175k residence nil rate band preserved but frozen to 2030, but a restriction on Business and Agricultural relief to 50% on value over £1m from April 2026 – this will be very painful for some and will put huge pressure on many family run farms and family run businesses.
Stamp Duty Land Tax: Increase in the SDLT surcharge for second homes to 5%.
An additional element that may affect you as an individual, is that from 1 January 2025, the VAT exemption on all privately owned school fees will end, meaning that VAT at the standard rate of 20% will apply to private school fees.

Head of Family, Jemma Jones said: “There may be parents that are required to pay private school fees under a ‘school fees order’ following a separation or divorce. If those payments now become unmanageable due to VAT being applied, the school fees order can be revisited. Anyone that is concerned about this should seek advice from a family lawyer.”

For Business:

National Insurance: Employee National Insurance has been frozen. Employers National Insurance contributions will rise from 13.8% to 15%. The threshold at which businesses start paying national insurance has been reduced from £9,100 to £5,000.
Employment Allowance (small businesses): This will increase from £5,000 to £10,500, which the chancellor says will mean 865,000 employers won’t pay any National Insurance at all next year.
Business Rates: The current 75% discount to business rates, which is due to expire in April 2025, will be replaced with a discount of 40% (up to a maximum discount of £110k). In practice this means business rates will ‘only’ double next year, rather than quadrupling, which was feared.
Research Funding: £6.1bn is expected to be used for research funding for certain sectors (engineering, biotechnology and medical science).

Senior Partner, John Workman commented: “Anyone who has a business is now working out how the NIC change will impact on future hires and the overall cost of employing existing staff. This is a tax on jobs. Pumping money into unreformed public services, on top of major public sector pay settlements before the election and those still to come may buy some time to reduce the risk of crisis and public sector strife, but it looks like using a bigger sticky plaster, not healing the wounds.

I have long understood that if we want better service, we have to pay more for them – what I don’t understand is why just throwing money at them without reform is going to deliver better services in the short term.

This budget does deliver pain. Does it deliver solutions or growth? The jury is very much out.”

Head of Private Wealth, Sam Thornton advises “There is a need for business owners and high net worth individuals to review their estate planning strategy. Three key areas that should be taken into consideration include:

Business relief was introduced to avoid successful businesses having to be sold or wound up to meet an inheritance tax liability on the death of an owner. The previously unlimited relief allowed the owners of businesses of all sizes to retain ownership in later life, without fear of the impact of inheritance tax. The introduction of the £1m upper threshold will require the owners of successful businesses to carefully reconsider their succession planning, if the business is to be preserved for the benefit of future generations.
Pensions had become a strategic estate planning tool for HNW individuals, many choosing to leave pension funds untouched, utilising other assets to fund their living expenses in retirement – on the basis that the pension fund would not be subject to inheritance tax on death. Whilst existing pensions remain untouchable without incurring income tax at the marginal rate, HNW individuals still making pension contributions as part of an inheritance tax planning strategy will need to reconsider their approach.

AIM portfolios have long been an attractive estate planning option for wealthy older clients. Inheritance tax relief is secured after two years of ownership, making the investment an option for individuals concerned that they will not survive the 7 years required for an outright gift to be exempt from IHT. The reduction of the relief from 100% to 50% undoubtedly makes the use of AIM investments for this purpose a less attractive option.

If you are evaluating your options after hearing this news, it is advisable to contact a private wealth lawyer.”