Autumn Budget Highlights:

October 31, 2024

Autumn Budget Highlights:

1. National Living and Minimum Wage Increases

National Living Wage for workers aged 21 and over will rise by 6.7% to £12.21 per hour from April 2025.
National Minimum Wage for 18-20-year-olds will increase to £10.00 per hour.
Example: A 21-year-old currently earning £11.45 per hour will see a £0.76 hourly increase, equating to an annual rise of approximately £1,500 based on full-time hours.

2. National Insurance Contributions (NICs)

Employer NIC Rate: Increasing from 13.8% to 15% from April 2025.
Secondary Threshold: Threshold for employer NI contributions will reduce from £9,100 to £5,000 per year until April 2028, impacting NIC costs for lower earners.
Employment Allowance: Increases from £5,000 to £10,500 to assist small employers with NIC costs, and the £100,000 eligibility threshold will be removed.
Example: An employer paying an employee £9,000 per annum will now begin paying NICs from the £5,000 threshold, increasing NIC costs for lower wage brackets, partially offset by the increased Employment Allowance, capped at £10,500.

3. Real-Time Reporting for Benefits in Kind

From April 2026, real-time reporting and payment of Class 1A NICs will be required for most benefits in kind (excluding accommodation and loans). Initial voluntary reporting will become mandatory, streamlining year-end tax reporting.

4. Overseas Workday Relief Changes

Relief will be capped at the lower of 30% of qualifying income or £300,000 per annum, effective from April 2025.
The qualifying period extends from three to four years, offering flexibility for employees with international roles.

5. Key Measures Affecting Employee Expenses and Benefits

Company Car Tax: Zero-emission vehicle tax rates will increase by 2% per annum, reaching 9% by 2029-30. Low-emission vehicles (1-50g CO₂/km, including hybrids) will increase to 19% by 2029-30.
- All other vehicle bands will see a 1% increase per annum, with maximum rates reaching 39% by 2029/30.
Car Ownership Loopholes: From April 2026, tighter regulations to close tax avoidance gaps in car ownership schemes.
Umbrella Companies: Responsibility for PAYE management will shift to recruitment agencies or, if none, the end client, from April 2026.
Apprenticeship Levy: An additional £40 million investment to make the levy more flexible as a Growth and Skills Levy.

6. Personal Tax Changes

Income Tax: Main rates (20%, 40%, and 45%) and thresholds (£37,000 and £125,000) will remain frozen until April 2028.
Capital Gains Tax (CGT): Basic rate rises to 18% (from 10%), higher rate to 24% (from 20%) for disposals after 30 October 2024. Business asset disposal rates will rise to 14% (from 10%) in April 2025 and 18% (from 14%) in April 2026.
Carried Interest: CGT rate increases to 32% from April 2025, moving to income tax treatment after April 2026.
Inheritance Tax (IHT): For business and agricultural assets, 100% relief applies to the first £1 million; amounts over this receive 50% relief starting April 2026.

7. Business Tax Changes

Corporation Tax: The rate remains capped at 25%, with the small profits rate (19%) unchanged.
Capital Allowances: Full expensing and the £1 million Annual Investment Allowance continue, with simplified guidance on allowable expenses.
R&D Reliefs: Current levels of support maintained, with new R&D disclosure requirements planned.
Patent Box & Intangible Assets: These regimes will continue as-is, alongside the intangible fixed asset regime.

8. Sector-Specific Tax Adjustments

VAT for Private Education: From 1 January 2025, a 20% VAT rate will apply to private school fees, including boarding services.
Fuel Duty: Freeze continues with the temporary 5p cut extended by one year.
Tobacco Duty: Increases by inflation +2%, with a 10% increase on hand-rolling tobacco from October 2024.
Vaping Products: A new duty of £2.20 per 10ml of vaping liquid will commence from October 2026.
Alcohol Duty: Draught product duty cut by 1.7%, while other alcohol products will increase with inflation from February 2025.
Air Passenger Duty (APD): Increases of up to £2 for short-haul and £12 for long-haul flights, with additional hikes for premium classes.

Conclusion The 2024 Autumn Budget indicates significant rises in wages, employer NICs, and enhanced real-time tax reporting on benefits. These adjustments will likely increase payroll and benefit costs. The frozen income tax thresholds, combined with CGT rate increases, are expected to affect individual tax burdens. Businesses should prepare for changes in employment and benefit costs and monitor sector-specific tax adjustments to ensure compliance.