Autumn Budget 2024: Main Announcements and Changes

Chancellor Rachel Reeves delivered the Labour government’s inaugural Budget on 30 October 2024.

In this blog, we round up the main changes across several key areas and consider how they might affect you.

Capital gains tax

Capital gains tax (CGT) is a tax on the profit when you dispose of an asset that has increased in value, such as the sale of stocks, bonds and property. CGT is paid on the gain you make, rather than the amount of money you receive.

In the Autumn Budget, the Chancellor announced that for disposals made on or after 30 October 2024, the lower rate of CGT will rise from 10% to 18%, and the higher rate from 20% to 24%. These changes align the CGT rates with those on sales of residential property.

The rate of CGT that applies to business asset disposal relief and investors’ relief is increasing to 14% for disposals made on or after 6 April 2025 and from 14% to 18% for disposals made on or after 6 April 2026.

What the Budget’s changes to CGT mean for you: Speculation was rife ahead of the Autumn Budget that the Labour government would align CGT rates with income tax bands.

While these rumours proved unfounded, investors are encouraged to review their asset-holding structures to ensure they are maximising their financial position, with an increased emphasis on long-term planning to ensure they do not go over their annual limit for CGT over time.

Read more about CGT changes in the Budget 2024 in the government’s policy paper here.

Inheritance tax

Inheritance tax (IHT) is a levy applied to the estate (property, money and possessions) of someone who has died. Currently only around four per cent of families end up paying it, as most estates fall below the tax threshold.

Anything left to a spouse or civil partner is exempt from IHT, regardless of the estate’s value. So, if someone leaves their entire estate to their partner, even if it is worth £10m, no inheritance tax will be charged.

Every individual has a £325,000 IHT-free allowance. This means that estates valued below this are not subject to IHT, while those above it are taxed at 40 per cent on the excess.

In October’s Budget, the government stated that the freeze in IHT thresholds will be extended until 2030, meaning the nil-rate band remains at £325,000 and the residence nil-rate band (an extra amount you can pass on after death in some circumstances) stays at £175,000.

The Chancellor announced reforms to agricultural property relief (APR) and business property relief (BPR). From April 2026 business and agricultural assets previously free from inheritance tax will be subject to a combined limit of £1m, with a new reduced rate of 20% being charged on assets above that.

From 6 April 2027, inherited pensions will also be brought into a deceased’s estate and subject to IHT. The government is currently consulting on the proposals, and more details are expected to follow after the consultation closes on 22 January 2025.

What the changes in the Budget to IHT mean for you: Although there was no direct rise to IHT rates, it is likely that more families will be drawn into the IHT net as time passes, largely due to the increase in property prices.

Bringing pension funds within the value of a person’s estate for IHT purposes will have a big impact on retirement and estate planning. Those who were planning to preserve their pension pot to pass tax-efficiently to family (other than their spouse) after their death will need to revisit their arrangements. Taking pension benefits, especially tax-free cash, and making gifts is likely to be more attractive from an IHT perspective.

Stamp Duty Land Tax

Stamp duty (SDLT) is a tax due on property or land over a certain price in England and Northern Ireland and is taxed in bands.

Following the announcement in the Autumn Budget, SDLT rates on second homes are now:

£0 – £250,000: 5%

£250,000 – £925,000: 10%

£925,000 – £1.5m: 15%

£1.5m+: 17%

Chancellor Rachel Reeves also confirmed in the Budget that the government will not scrap proposed stamp duty changes or introduce an extension to current rates of first-time buyer SDLT relief.

This means that from the beginning of April 2025, the SDLT threshold will drop from £425,000 to £300,000 for first-time buyers, and any properties worth over £500,000 will be subject to the same stamp duty rates as second-time buyers.

What the changes in the Budget to SDLT mean for you: Although the government’s changes to SDLT on second homes are intended to benefit first-time buyers by disincentivising the acquisition of second homes, removing the current reliefs may make it difficult for those looking to get on the property ladder.

VAT

From 1 January 2025, VAT will be charged on private school fees and business rates charitable relief will be removed from private schools in England.

This means that from 1 January 2025, private school fees will rise by 20%.

For the full text of the Budget 2024 and analysis of its impact on households, click here.

Solicitors Alton

If you need legal advice about how the changes introduced in the Budget affect you, get in touch with Bookers & Bolton.

Our Private Client team has a reputation for offering high-quality advice and guidance tailored to meet your needs regarding all areas of estate planning, management and administration.

Our specialist lawyers in our Private Client department offer clear specialist lifetime planning advice and can help with a wide range of matters, including:

Will Drafting.
Probate and Estate Administration.
Powers of Attorney.
Deputyship and Court of Protection.
Elderly Client Services.
Deed of Trust.

For more information about our Private Client services, click here.

Our Private Client solicitors work closely with other members of our team, including our Property lawyers, to provide comprehensive legal advice tailored to your needs.