Autumn Budget 2024: A Quick Guide for Businesses and Business Owners

Last week’s Budget brought some changes, for some more than others. Brian Levine, part of our Corporate and Business team, talks about the effects of the Budget on businesses and their owners.

Changes to tax when you sell your business or your business investment

The Capital Gains Tax (CGT) rate for Business Asset Disposal Relief (BADR), which can apply to disposals by employees and directors of their unlisted businesses, increases from 10 per cent to 14 per cent for disposals made on or after 6 April 2025 and from 14 per cent to 18 per cent for disposals made on or after 6 April 2026. The CGT rate for Investors' Relief goes up in the same way as BADR but the lifetime limit for the relief reduces from £10 million to £1 million for disposals made on or after 30 October 2024, significantly limiting its financial benefit going forward.

This may nudge some to sell before 6 April 2026 (or 2025) but is not as challenging as some anticipated (e.g. the rates were not harmonised with income tax rates).

Death and Taxes – the only two certain things in life

From 6 April 2026, 20 per cent Inheritance Tax (IHT) will be charged on transfers of qualifying Business Property and Agricultural Property worth more than £1m, a combined cap for both. The new tax will apply on:

(a) the death of a property owner or

(b) the recipient as a gift of such property within 7 years or

(c) the gift into trust of such property during the lifetime of the owner or the recipient.

We expect this new tax charge to impact owners of trading businesses and agricultural land in the UK, especially those with long-term family ownership focussed on succession over generations. Capping IHT relief will pose financial challenges for these owners, both in managing the tax burden and planning for the future of their long-held enterprises.

Anti-avoidance rules apply to trusts created between 30 October 2024 and 6 April 2026. Each trust will have a £1m allowance but you can’t use multiple trusts just to get around that overall £1m cap.

From 6 April 2026 non-listed investments (e.g. Alternative Investment Market shares) will only attract 50 per cent relief, so will be taxed at 20 per cent from the first £1.

And from 6 April 2027, unused pension funds and death benefits payable from a pension also come into the IHT net.

National Insurance Contributions for employers

From April 2025 employers' National Insurance Contributions (NICs) increase from 13.8 per cent to 15 per cent and the threshold at which they become payable drops from £9,100 to £5,000. This will increase day-to-day business operating costs adding to the pressures created by recent inflation and cost increases generally.

For smaller employers, there is some relief, as the employment allowance increases from £5,000 to £10,500.

Changes to the taxation of “non-doms”

From 6 April 2025 the old non-domicile system vanishes. For new entrants to the UK, there will be a 4-year exemption on non-UK asset gains and income, whether brought to the UK or not, and IHT will be due on worldwide assets on death if you have been UK tax resident for ten UK tax years out of the previous twenty.

If you have any concerns about how any or all of this may impact you or your business, please do get in touch with our Corporate and Business Team.