Overview
In the Budget delivered on 30th October the Chancellor announced various measures to raise increased tax revenue, including changes to the rates of Inheritance Tax relief for agricultural and business assets.
Key tax changes that were announced included the following:-
Inheritance Tax
- From April 2026 the 100% rate of relief will continue to apply to the first £1 million of combined agricultural and business property. For any value in excess of £1 million the relief on any agricultural or business assets will be reduced to 50%. The Inheritance Tax rate on any amount still chargeable remains at 40%. We understand that for lifetime transfers made before 30th October, 2024 that come back into charge if the donor dies within 7 years, the existing rates with 100% relief on the full value will apply. For transfers made on or after 30th October 2024 the new rates will apply if the donor dies on or after 6th April, 2026.
- The rate of inheritance tax relief for AIM shares will be reduced from 100% to 50% from April, 2026.
- Unused pension funds and death benefits payable from a pension are to be included in the value of a person’s estate for inheritance tax purposes from 6th April, 2027. We await further clarification.
- The current rates of £325,000 for the nil rate band and £175,000 for the residence nil rate band will be frozen until 203Capital Gains Tax
Capital Gains Tax
- The rates of capital gains tax on the disposal of assets generally will be increased to 18%, for any part of the gain that falls within the basic rate band after taking account of income and 24% for any part of the gain above the basic rate limit. This will align the rates with those for gains on residential properties. The new rates apply to disposals made on or after 30th October, 2024.
- The tax rate for gains on the disposal of business assets that qualify for Business Asset Disposal Relief (BADR) will increase from 10% to 14% from 6th April, 2025 and will increase again to 18% from 6th April 2026. The lifetime limit for gains qualifying for BADR will remain at £1 million.
National Insurance Contributions (NIC)
- The rate of employer NICs will increase from 13.8% to 15% from 6th April, 2025.
- The point at which employers NICs become payable on an employee’s earnings will be reduced from £9,100 a year to £5,000 a year from 6th April, 2025.
- To partly counteract these changes the employment allowance of £5,000 that businesses can deduct from their employer NICs bill will be increased to £10,500 from 6th April, 2025. For smaller employers the increase in the employment allowance is likely to mean they will not be affected by the increase in employers NICs.
Stamp Duty Land Tax
The surcharge on Stamp Duty Land Tax for the purchase of additional dwellings will be increased from 3% to 5% from 31st October, 2024.
Capital Allowances
The 100% First Year Allowance for qualifying expenditure on zero emission cars will be extended a further year to 31st March, 2026 for corporation tax purposes, and 5th April, 2026 for income tax purposes.
Double cab pick ups with a payload of one tonne or more will be treated as cars for capital allowances purposes for purchases from 6th April, 2025.
We will be updating our website for any significant developments or changes when further details are released.
You can download this budget summary in a PDF format by clicking here.
