The first Labour budget in 14 years was delivered on 30th October, and there are plenty of talking points as the dust settles. "Reeves’ £40 billion tax raid” is just one of the phrases being bandied about, with "Return of Tax and Spend” on the other side of the political spectrum…
As promised, there were no changes to income tax, or employee, or self-employed NICs, but there were a number of seismic changes elsewhere.
Employers’ NIC
Secondary Class 1 NICs rate increased to 15% and employment allowance increased to £10,500 at April 2025. Current restriction on employers with PAYE liabilities above £100,000 will be removed.
CGT – main rates
Rise to 18% and 24% to match those for disposals of residential property. This takes effect immediately.
Carried interest
Rate increased to 32% with immediate effect.
CGT reliefs
BADR retained along with £1m lifetime limit. Applicable rate on qualifying disposals increased to 14% from April 2025, then 18% from 2026. Lifetime limit for investors’ relief is cut to £1m and rates increase in line with BADR.
Anti-avoidance
A new rule prohibits "locking-in" of beneficial CGT where transfers occur on or after 4/3/24.
IHT business reliefs
Existing 100% rates of relief continue for first £1m of combined agricultural and business property, but drop to 50% thereafter, or for shares designated as "not listed" on markets of recognised stock exchanges.
Pensions
IHT exemption for unused pension funds scrapped from April 2027. Changes to force registered pension schemes to be UK resident from April 2026, and charge for transfers offshore to a QROPS.
MTD for ITSA
Extended to sole traders and landlords with income over £20,000 by 2029.
Property taxes
SDLT charge for additional property purchases increased to 5% for completions on or after 31/10/24. Knock-on effect raising single rate payable by companies and non-natural persons acquiring dwellings for more than £500,000, to 17%.
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