The first Labour Budget dropped last week. At Jupps Accountants, we have broken down our thoughts and key takeaways.
💼 Personal Taxes
Income & National Insurance Thresholds: Freeze on income tax and National Insurance thresholds to end in 2028, preventing people from being dragged into higher tax bands as their wages rise
Capital Gains Tax: Rates will increase to align with residential property rates, going from 10% to 18% for lower rates and from 20% to 24% for higher rates.
Business Asset Disposal Relief: BADR will remain at 10% this year, then rise to 14% in April 2025 and to 18% in 2026–27.
HMRC Interest on Overdue Tax: Currently 2.5% over base rate but could potentially reach 4% above the base rate.
🏢 Business Taxes
National Insurance Changes: Firms to pay National Insurance on workers’ earnings above £5,000 from April 2025, down from £9,100 currently, with the employers NI rate increasing from 13.8% to 15%
Employment Allowance Boost: Increasing from £5,000 to £10,500 in April 2025, with the £100,000 eligibility threshold scrapped, helping smaller businesses save more.
Corporation Tax: Main rate of corporation tax, paid by businesses on taxable profits over £250,000, to stay at 25% until next election
Business rates relief: Business rate relief for retail, hospitality, and leisure will be reduced from 75% to 40%, with a cap of £110,000 per business. Additionally, the small business multiplier will be frozen next year to help mitigate inflationary increases.
💸 Wages, Benefits, and Pensions
Minimum Wage Rise: Legal minimum wage for over-21s will increase from £11.44 to £12.21 from April 2025, with increases for younger age brackets and apprentices as well.
State Pension and Benefits: State pension will increase by 4.1% in April 2025, with working-age benefits seeing a 1.7% rise in line with inflation.
🚗 Transport, Alcohol, and Tobacco
Alcohol Taxes: From February 2025, non-draught alcoholic drinks will see tax increases, while draught drink taxes are reduced by 1.7%.
Fuel Duty: Frozen for another year and the temporary 5p cut extended to March 2026. This will save the average car driver £59, vans £126 and Heavy Goods Vehicles £1,079 next year.
Vehicle Excise Duty (VED) First Year Rates (FYRs) are changing from 2025-26. Rates for zero emission cars will be frozen at £10 until 2029-30 while rates for hybrid and petrol/diesel cars will rise from 1 April 2025.
Company Cars: The tax percentage used to calculate company car tax for zero-emission vehicles will rise by two percentage points annually for 2028/29 and 2029/30, reaching 7% and 9% respectively. Other vehicle categories will also see increases starting in 2028/29. Additionally, the 100% first-year capital allowance for qualifying zero-emission vehicles has been extended through the end of the 2026 tax year.
🏠 Housing
Stamp Duty Surcharge: From October 31, 2024, the surcharge for second homes and buy-to-let properties will increase from 3% to 5%.
🏛️ Inheritance Tax
Inheritance tax £325,000 nil rate threshold freeze extended by further two years to 2030, along with the £175,000 residence nil-rate band and the residence nil-rate band taper (starting at £2 million).
Inherited pension pots subject to the tax from April 2027.
The Budget 2024 brings many changes that could impact both your personal finances and business operations. Get in touch if you’d like to know more or need assistance in planning ahead!