Chancellor Rachel Reeves has delivered Labour's first budget in 14 years. It brings a raft of changes aimed at raising over £40 billion each year in extra taxes. Those with the 'broadest shoulders' will bear the brunt, as the government looks to plug the £22 billion 'black hole' left by the previous administration.
So, what does this autumn's tax-heavy Budget mean for you and your finances? Let's look at some of the key announcements and talking points.
Non-dom tax status gone
The chancellor confirmed that the controversial non-dom tax status will be abolished from April 2025. In its place, a new residence-based scheme will be introduced, which Reeves claims will include "internationally competitive arrangements." This move is expected to raise £12.7 billion over the next five years.
Business tax hikes
Employers are set to pay more in National Insurance Contributions (NICs), with the rate increasing by 1.2% to 15% for each employee from April 2025. The threshold for businesses to start paying NICs will also fall from £9,100 to £5,000.
Meanwhile, the main corporation tax rate on profits over £250,000 will remain at 25% until the next election.
Income tax and NICs thresholds
There was some relief as the chancellor confirmed that income tax and National Insurance thresholds will once again be uprated in line with inflation from 2028-29 onwards. This had been frozen since 2022.
Capital gains tax rise
As expected, the chancellor announced an increase in Capital Gains Tax (CGT). The lower rate will rise from 10% to 18%, while the higher rate will go up from 20% to 24%. However, CGT on residential properties will remain at 18% and 24%.
Stamp duty surcharge
From 31st October 2024, the stamp duty surcharge for second homes will increase from 3% to 5%. This will impact those buying additional properties, as well as landlords.
State pension increase
The good news is that the State Pension will increase by 4.1% from April 2025 under the triple lock mechanism, which ties the rise to the highest of inflation, earnings growth or 2.5%.
What’s next?
The chancellor has committed substantial funding to support the electric vehicles industry (£2 billion), life sciences (over £500 million), and aerospace (£1 billion) through vital research and development. If you’re an expat or investor in these areas, you’re in good standing financially.
For most investors and expats, the Budget tells us that you should buy more bonds, shares, and other fixed-interest products using your Isa allowance to keep all your capital gains. If you wish to buy a home, it pays to hurry the purchase before the stamp duty increase takes effect in April.
How we can help
International Wealth Ventures offers expert guidance on citizenship by investment, retirement planning, and tax advice to help you navigate the changes introduced in the Autumn Budget 2024. Contact us today to discuss how we can secure your financial future.