UK Autumn Budget 2024

UK Autumn Statement 2024: Key Highlights

On October 30, 2024, the first female Chancellor of the Exchequer, Rachel Reeves, presented the Autumn Statement before the UK Parliament. This is the Labour Government’s first budget in the last 14 years. The Budget is focusing on the key principles like restoring the economic stability and increasing investment. The proposals put forth in the autumn statement aim to promote protection of working people, fixing the NHS (government run health service in UK), and rebuilding Britain.

The following are the highlights of the proposals presented in the Autumn Statement.

Measures relevant for employers/individuals:

National Insurance Contributions (NICs): The Autumn statement has proposed to increase the employer’s NI contribution rate from 13.8% to 15%. No change is proposed in employee’s NI contribution rates. The Autumn statement further proposes to reduce the secondary threshold i.e., per-employee threshold at which employers becomes liable to pay National Insurance contribution, from GBP 9,100 to GBP 5,000, effective from April 6, 2025.

The following table summarizes the changes in the contribution rates:

Timeline	Rates for Employer	Main rates for Employee (below Upper Earnings Limit)	Additional rate for Employee (above Upper Earnings Limit)
Prior to April 6, 2025	13.80%	8%	2%
Effective from April 6, 2025 (announced in Autumn statement 2024)	15%	8%	2%

With an aim to protect the smaller businesses, it is proposed to increase the employment allowance from GBP 5,000 to GBP 10,500. Employment allowance permits eligible employers to reduce their national insurance liability up to the above limit.
National Minimum Wage (NMW)/National Living Wage (NLW): Effective from April 1, 2025, the NLW rates will increase by 6.7% from GBP 11.44 per hour to GBP 12.21 per hour and the NMW rate for those aged between 18 to 20 will increase by 16.3% to GBP 10 per hour. The government wants to create a single adult wage rate and therefore, working on reducing the gap between the main NLW rate and rate applicable to those aged between 18 to 20 years.
There will be no increase in the National Insurance, Value Added Tax (VAT) and income tax for working people.
From April 2028, the personal income tax and NI thresholds will be updated in line with inflation and the government will not continue with the freeze on these thresholds.
From April 2026, use of payroll software to report and pay tax on benefits in kinds would become mandatory for both income tax and national insurance.
The main rates of Capital Gain Tax (CGT) will increase effective from October 30, 2024, as follows. These new rates will match the residential property rates, which are not changing.

Category of Tax	October 31, 20204 onwards	Pre-October 31, 2024
Lower rate of CGT	18%	10%
Higher rate of CGT	24%`	20%

It is proposed to remove the remittance-based taxation applicable to non-domiciled individuals and replace it with a new internationally competitive residence-based regime from April 6, 2025. The new regime will provide 100% relief on foreign income and gains for those newly arrived in the UK for the first 4 years of residence provided they are not resident in UK in any of the earlier 10 consecutive years. After the first four years of residence, they will pay tax similar to other residents. The budget also includes proposals relating to transitionary arrangements. Further, significant changes are proposed with respect to inheritance tax.
The higher rates of stamp duty land tax for second home will increase from 3% to 5%, effective October 31, 2024. These rates apply to purchase of second homes, buy-to-let residential properties and companies purchasing residential properties

Measures relevant for businesses and others:

It is proposed to keep the headline corporate tax rate at 25% for the remaining period for this parliament. Further the small profit tax rate and the marginal tax rate and thresholds will also be maintained. It is proposed to continue with current system of R&D relief and capital allowance for remaining period of this parliament.
The Government proposes to modernize the HMRC’s tax advisor registration system and make the registration mandatory for tax advisors who interact with HMRC on behalf of the clients. The legislation for this would be proposed in future finance bills. The government has plans to strengthen the regulatory framework for tax advisor market with higher HMRC powers and sanctions for tax advisors facilitating non-compliance.
The Government will make recruitment agencies responsible for accounting for PAYE in case of payment made to workers who are employed through intermediary or umbrella companies. If there is no agency involved, the responsibility will be on the end client. This will take effect from April 2026. This measure is aimed at tackling tax avoidance and frauds by intermediaries in recruitment market.
Rate of interest levied by HMRC on unpaid tax liability will be raised by 1.5 basis points effective from April 2025.
The government proposes to reform the business rate system and would conduct consultations between November 2024 to March 2025.

Other proposals

From January 1, 2025, all education and boarding services provided by a private school or connected person will be subject to 20% VAT.
It is proposed to maintain the rates of fuel duty at the current levels for a further 12 months. Thus, the temporary 5 pence cut in fuel duty is extended for another 12 months cancelling the planned inflation-linked increase for 2025-26.
It is proposed to adjust and increase the Air Passenger Duty (APD) rates in 2026-27.
To discourage non-smokers from taking up vaping, the government will introduce for the first time, from October 1, 2026, a flat rate excise duty on vaping liquids at £2.20 per 10 ml of liquid.

Implications:

Employers should take note of increase in NI rates and reduction in secondary threshold and evaluate the impact on their profitability. Small business should take advantage of employment allowance increase. Businesses should monitor developments with respect to proposals for regulatory framework for tax advisors, proposals to tackle non-compliance relating recruitment through intermediaries and evaluate their impact.

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