The Autumn Budget 2024

This year, the Autumn Budget includes important changes to inheritance tax, capital gains tax and stamp duty land tax. 

Capital Gains Tax

CGT rates have not gone up as much as many feared, but they have gone up with immediate effect today.

The new rates for CGT have been increased to the rates applicable to properties: 18% or 24% depending on the tax-payer’s total income and gains. Those who feared it would be matched to income tax rates will be relieved, but an increased tax of 4% on the sale of a business could have an impact on that market.

On the other hand, the relief available on the sale of a business will be of increased value in the short-term: Business Asset Disposal Relief (BADR, or maybe ‘BAD relief’?) will remain at current rates until April 2025. Seller’s who qualify will be saving £140k on the sale of a business now, dropping back to £100k in April 2025, and then down to £60k in April 2026. Whether these savings will encourage sales now is not clear.

Inheritance Tax

Inheritance tax (IHT) had some major announcements, covering Business Relief, Agricultural Relief, and Pensions.

Pensions will lose their IHT exemption from April 2027, bringing them within IHT for the first time. This is likely to impact the pension industry, and increase people’s willingness to withdraw from their pensions during lifetime.

Business Relief (BR) and Agricultural Relief (AR) are being reduced significantly from April 2026. A new £1m cap is being introduced with any relief over that threshold being reduced down to 50% effectiveness (20% IHT instead of 0% IHT). AIM shares (and other related investments) will not qualify for the £1m cap, and will lose 50% of the IHT relief.

Notably, there has been no announcement of any change to lifetime gifting (unless it is of BR or AR assets after April 2026).

Stamp Duty Land Tax

SDLT is also subject to an immediate increase for all purchases of ‘2nd homes’ -  applicable to any purchase where at least one of the buyers has another property (unless they are selling their home to buy a replacement).

The additional tax on these purchases is increasing from 3% on the total purchase price up to 5% on the total purchase price. On a £500k property, that is an increase in tax of £10k.

This means the top rate of tax on a property purchase will be 19% in some cases for non-UK based purchasers.

Non-doms

The Budget also included confirmation of the anticipated changes to the tax regime applicable to people who moved to the UK from other jurisdictions, so called ‘UK-resident non-doms’. The government have released draft legislation and a policy paper setting out in detail how the changes will apply. In particular, it has been clarified that existing ‘excluded property trusts’ (prior to 30 October 2024) will retain the current protection from the 40% IHT charge on death, but will not be exempt from the 10 year anniversary charges (up to 6%). Please see my other articles for more details on these changes.

We are anticipating more detail in the coming days, weeks and months.

What is certain is that ‘wealthy families’, by which I mean any family that has assets over £1m, should be taking advice on how these changes will affect them and what steps they can take to preserve their family wealth.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.