Autumn Budget 2024
A summary of the 2024 Autumn Budget announcements, including changes to taxes, pensions, trusts and inheritance tax. Read our experts' takeaways and insights.
Our takeaway
This was clearly going to be a challenging Budget, with the Chancellor seeking to address the nation’s funding gap, while at the same time trying to shore up public services and encourage economic growth. It is yet to be seen exactly how the changes announced today will affect businesses in practice, and how their response plays through to employment and wages. Hopefully, however, the most immediate and pressing decisions on taxation and public spending have now been made, and there will be some stability and certainty for both businesses and households in the years ahead.
One of the most significant changes to pensions was in relation to inheritance tax. While most people will still benefit from their estate falling under the limits for inheritance tax, many people will have planned their retirement with a different understanding of how their wealth would be taxed and may have started taking income on this basis.
Many advisers will now need to contact their clients and completely rethink their approach to estate planning and income withdrawals.
Income tax
The personal allowance will remain at £12,570, and this is frozen until 2028.
The rates for the UK (excluding Scotland) will remain at:
- Basic tax rate 20% on first £37,700 over the personal allowance.
- Higher rate 40% on earnings over £37,700 plus personal allowance.
- Additional rate 45% on earnings over £125,140.
The rates of income tax for Scottish taxpayers will be announced in the Scottish Government’s budget in December.
National Insurance
Employee National Insurance
As with income tax, Labour stated in their manifesto they wouldn’t increase employee National Insurance contributions. From 6 April 2025, employee National Insurance will remain at:
- Class 1 National Insurance contributions employees will pay 8% on their earnings between the primary threshold and the upper earnings limit; between £12,570 and £50,270.
- Class 1 National Insurance contributions employees pay 2%, on their earnings above the National Insurance contributions upper earnings limit.
Employer National Insurance
Class 1A and 1B employer National Insurance contributions from 6 April 2025 will be increased from 13.8% to 15.0% on earnings over £5,000.
The Secondary Threshold, from which employer contributions start to be paid, will reduce from £9,100 a year to £5,000 a year.
The Employment Allowance, which allows employers who pay less than £100,000 in National Insurance contributions to reduce their National Insurance bill, will increase from £5,000 to £10,500 from 6 April 2025.
Pensions
Pension death benefits
2.11 of Autumn Budget 2024 and Consultation: Inheritance tax on pensions
There is normally no inheritance tax on death benefits if the choice of beneficiary is the scheme administrator’s, using their powers of discretion. From 6 April 2027, inherited pension death benefits will be subject to inheritance tax regardless of who chooses the beneficiaries. The Government will consult on the processes needed to implement these changes.
State pensions
The Government is keeping the triple lock. The Basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2025 by 4.1%, in line with earnings growth in September 2024.
- The new State Pension will rise by £474.85 to £12,016.75 a year.
- The Basic State pension will rise by £361.40 to £9,175.40 a year.
Overseas transfers
Reducing tax-free overseas transfers of tax relieved UK pensions
The overseas transfer charge is a 25% tax charge which arises on transfers to Qualifying Recognised Overseas Pension Scheme (QROPS) unless certain exemptions apply. The exemption for transfers to a QROPS established in the European Economic Area (EEA) and Gibraltar will no longer apply for transfers made on or after 30 October 2024.
From 6 April 2025, the Government also announced that the conditions of Overseas Pension Schemes (OPS) and Recognised Overseas Pension Schemes (ROPS) established in the EEA will be brought in line with OPS and ROPS established in the rest of the world, so that:
- OPS established in the EEA must be regulated by a regulator of pension schemes in that country.
- ROPS established in the EEA must be established in a country or territory with which the UK has a double taxation agreement providing for the exchange of information, or a Tax Information Exchange Agreement.
Scheme administrators
The Government announced, from 6 April 2026, scheme administrators of registered pension schemes must be UK resident.
Savings
Individual savings account
Subscription limits remain the same from 6 April 2025 so are:
- Adult ISA annual subscription - £20,000
- Child Trust fund - £9,000
- Junior ISA - £9,000
- Lifetime ISA - £4,000
British ISA
It was announced that the Government will not be moving forward with the British ISA due to mixed responses to the consultation launched in March 2024.
Inheritance tax
The nil rate band (£325,000) and the residential nil rate band (£175,000) will remain frozen until April 2030.
From 6 April 2026, an individual will be able to leave combined business and agricultural assets to their loved ones of £1million without an Inheritance tax liability, with any excess being taxed at 20%.
From 6 April 2025, the domicile-based system for inheritance tax will be replaced by a residency-based system.
Trusts
Reforming the taxation of non-UK individuals (sections 56 to 58)
Under current rules, if the settlor is a beneficiary under a trust which was executed whilst non-domiciled returns to the UK, the trust is protected. From April 2025, that protection will no longer be available and if the individual is a settlor and resident in the UK for 10 years the trust will be caught.
Capital Gains Tax
From 30 October 2024 the lower rate will be increased to 18%, with the higher rate being increased to 24%. This brings the rates in line with the rates for residential property.
Capital Gains Tax update
Inheritance Tax update
National Insurance update
Disclaimer
The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.
All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.