The Chancellor, Rachel Reeves, delivered the first Labour Budget on 30 October 2024. 
 
This was a budget intended to restore stability to our economy and to begin a decade of national renewal. Investment will be funded by revised debt rules to facilitate additional borrowing and a hefty £40 billion of tax rises. 
 
Following the Labour manifesto's pledge that any tax rises wouldn't affect "working people", the lead up to the budget was fueled by rumours and much speculation on who "working people" were.  
 
 
Key measures (affecting our clients) announced by the Chancellor are summarised below but feel free to download our more detailed guide, with examples of how this impacts a "working person", a business owner, a landlord or a saver here. 

Employers' NIC 

From April 2025:- 
Employers' NIC will rise from 13.8% to 15% from April 2025. 
The Secondary Threshold (the threshold at which Employers start to pay NIC) will drop from £9,100 to £5,000. 
The Employment Allowance (a tax relief allowing eligible employers to reduce their Employers' NI bill) will increase from £5,000 to £10,500. 
The Employment Allowance will be available to all employers, whereas previously businesses with an Employers' NI bill of £100,000 or more per annum in the previous tax year would not be eligible 
 
It seems from this that rather than increase Employee's NI, and therefore stick to their manifesto promise, Labour are seeking to increase taxes on employers. The impact of these measures will need to be assessed on an employer-by-employer basis as some small employers may find they are better off due to the increased Employment Allowance! 

Capital Gains Tax (and Business Asset Disposal Relief) 

From 31 October 2024 (immediately):- 
The CGT rates for residential property remain unchanged at 18% (basic rate) and 24% (higher rate), 
The CGT rates for for other disposals will increase from 10% to 18% (basic rate) and 20% to 24% (higher rate). 

Business Asset Disposal Relief (BADR) 

Previously known as Entrepreneur's Relief, despite much speculation, this relief remains but the rates will change as follows:- 
From April 2025 the CGT rate will increase from 10% to 14%. 
From April 2026 the CGT rate will increase from 14% to 18%. 
 
The lifetime limit remains at £1million. 

Corporation Tax 

No changes announced. Rates will remain as previously announced - see our previous blog here

National Living/Minimum Wage 

From April 2025:- 
The National Living Wage (NLW) for age 21 and over will increase from £11.44 to £12.21 per hour. 
The National Minimum Wage (NMW) for 18-20 year olds will increase from £8.60 to 10.00 per hour. 
The National Minimum Wage (NMW) for 16-17 year olds and apprentices will increase from £6.40 to £7.55 per hour. 

Stamp Duty Land Tax (SDLT) 

From 31 October 2024 (immediately):- 
The rate of Stamp Duty for additional properties - known as Higher Rates for Additional Dwellings (HRAD) will increase from 3% to 5%. 

Double-Cab Pickups (another u-turn!) 

Further to the announcement earlier this year and subsequent u-turn, this is back on the table. 
 
From April 2025 double-cab pick-ups will be treated as cars (rather than vans/commercial vehicles) for capital allowances, benefits in kind and VAT purposes. 
 
If you already own a double-cab pick-up through your business, the good news is that you'll be able to use the previous treatment until the earlier of:- 
disposal 
lease expiry, or 
April 2029 

Summary 

We know that this Budget will hit some of our clients - particularly larger employers - fairly hard. It will also have an impact on the best way for directors to pay themselves and this is something we will be working with our clients on as we approach April 2025 as part of our annual tax planning. 
 
If you have any questions on how the Budget impacts you, please get in touch
 
Written by: 
Nicola J Sorrell - Effective Accounting 
Founder | Xero Champion | IR35 Expert 
Tagged as: Budget & Tax Rates
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