NewsBudget Announcements – How Could This Affect You?

October 31, 2024

Labour has just revealed its first budget in 14 years. Everyone was expecting some major changes to the tax system, and we have brought together the headline changes that could affect you.

Please note that this list is not an exhaustive list, nor does it constitute financial advice. If you have any concerns, please speak directly to a member of our team who may be able to assist, or to an independent financial advisor depending on your circumstances.

 

Capital Gains Tax (CGT)

There was much discussion prior to the budget that the CGT rules were likely to be amended. The budget did make amendments, but did not go as far as was expected. The main changes for CGT are:

  • CGT standard rates currently 10%, changing to 20%.
  • CGT higher rates currently 18% changing to 24%.

These changes are effective from 31 October 2024.

The new CGT rates may apply to any increase in value of an asset (e.g., property, shares etc.), however residential properties have been excluded from this change. This could affect anyone who is thinking of commencing, or who has ongoing financial separation claims, as this would reduce the amount available to be distributed. It is yet to be confirmed, however, whether there is any change to the exemption to CGT which allows for assets to be passed between spouses.

 

Stamp Duty Land Tax (SDLT)

SDLT was not expected to feature much in the budget update, however, a change will take effect for all people purchasing a second home or purchasing a residential property through a company, from 31 October 2024. From that date, any purchases of residential property that are for additional homes or being purchased through a company, the surcharge payable will increase by 2%. Therefore, the first band of £0 – £250,000.00 has increased from 3% to 5%, the second band of £250,001 to £925,000.00 has increased from 8% to 10%, and so on.

Separately, companies that are purchasing residential properties will see the rate charged for properties in excess of £500,000 being increased from 15% to 17%.

 

Inheritance TAX (IHT)

IHT is payable on the estate of a deceased person. The current allowances where tax is not payable (being the Nil Rate Band of £325,000 and Residence Nil Rate Band of £175,000) have been held until April 2030.

From April 2025, there will be a change to what is considered within the estate for a foreign or UK estate, for IHT purposes. Further detail is awaited on this, but if you have any concerns as to how this may affect an estate you are involved in, please contact us to discuss.

Change that will affect estates in the future include:

  • From April 2026, relief through Agricultural Property Relief or Business Property Relief will both taper for wealthier estates, with a relief of 100% being applied for the first £1 million claimed and 50% thereafter.
  • From April 2027, IHT will also be charged on unspent pension pots.

 

National Living Wage (NLW)

The NLW is set each year to ensure individual income is increased to take account of changes to the cost of living. The budget has confirmed this will increase, for those over 21, to £12.21 per hour (from £11.44) from April 2025. For anyone looking at, or have ongoing financial separation claims, this would add a further £1,400 into the pot to be considered.

 

You can contact us for a FREE initial consultation with one of our legal experts.

Exeter 01392 285000

Cullompton 01884 33818

 

Exeter Solicitors

21/22 Southernhay East, Exeter, Devon EX1 1QQ
Tel: 01392 285 000
Fax: 01392 285 001
DX - 8311 EXETER

Cullompton Solicitors

38 High Street, Cullompton, Devon EX15 1AE
Tel: 01884 338 18
Fax: 01884 323 56
DX - 49600 CULLOMPTON

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