Key Highlights from the 2024 Autumn Budget

The Chancellor’s first Autumn Budget under the new Labour government introduced significant updates that could impact your financial plans. From adjustments to stamp duty land tax and pensions to changes in inheritance tax and capital gains, these new measures reflect the government’s goals to stabilise finances while funding essential public services. You can read the full 168-page HMRC document here, or read our outline of the key changes that may affect you and highlight important considerations for your planning.
Download your guide to the impact on pensions & investments HERE.
1. Income Tax and National Insurance Contributions
Income Tax Rates and Allowances
The personal allowance will remain at £12,570, frozen until 2028, along with the basic rate tax threshold. This means that as wages rise, more individuals may find themselves moving into higher tax bands. Here’s a summary of the unchanged rates:
- Basic rate: 20% on income over £12,570 up to £37,700.
- Higher rate: 40% on income over £50,270.
- Additional rate: 45% on income above £125,140.
National Insurance
For employees, National Insurance (NI) rates remain the same. However, for employers, there will be an increase:
- Employer NICs: From April 2025, the employer NIC rate will rise from 13.8% to 15%, with the threshold lowered from £9,100 to £5,000. However, the Employment Allowance increases to £10,000, making it easier for smaller employers to offset these costs.
2. Pensions
Inheritance Tax on Pension Death Benefits
One of the most significant changes affects pension death benefits. Starting April 2027, pension death benefits will be included in the estate for inheritance tax (IHT) purposes. This change will impact the legacy planning of individuals who had previously expected their pensions to be exempt from IHT, potentially reducing what beneficiaries receive.
If you die after the age of 75, it appears that your estate will be liable for inheritance tax, and your beneficiary will also have to pay income tax on their inherited pension. We await further clarification from the treasury on this double taxation area.
State Pension Triple Lock Maintained
The triple lock will continue, which means that the State Pension will rise in line with earnings at 4.1% in April 2025:
- Full new State Pension: £230.25 per week.
- Basic State Pension: £176.45 per week for individuals and £282.15 per week for couples.
3. Inheritance Tax (IHT)
Nil-Rate Band and Residence Nil-Rate Band Frozen Until 2030
Both the IHT nil-rate band (£325,000) and the residence nil-rate band (£175,000) are frozen until 2030, meaning estates will face a higher effective tax burden as property and asset values increase over time.
Business and Agricultural Property Relief Adjustments
Effective April 2026, there will be a £1 million limit on the amount eligible for 100% IHT relief for business and agricultural property. Above this cap, assets will only qualify for 50% relief.
AIM shares will also qualify for 50% relief across the entire holding. This change could affect estate planning for clients holding substantial business or agricultural assets or those who have invested in IHT-friendly AIM portfolios.
4. Capital Gains Tax (CGT)
CGT Rate Increases
Capital gains tax rates will increase from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers on most assets. For business assets, the CGT rate (Business asset disposal relief) will increase gradually:
- April 2025: 14%
- April 2026: 18%
No Changes to the Annual Exemption
The CGT annual exemption remains at £3,000 for individuals and £1,500 for trusts, though these low thresholds mean more assets could be subject to CGT.
5. Trusts and Non-Domiciled Individuals
Changes to Non-Domicile Rules
From April 2025, non-domicile status for tax purposes will be replaced with a residency-based Foreign Income and Gains (FIG) regime, impacting inheritance tax liabilities on overseas assets. UK residents who previously benefited from non-domicile rules will need to assess the potential tax implications on worldwide assets.
6. Overseas Transfers and QROPS
The Overseas Transfer Charge will now apply to all transfers to Qualifying Recognised Overseas Pension Schemes (QROPS), including those within the EEA and Gibraltar, unless the member resides in the destination country. This change may affect clients considering moving their pensions abroad or retiring overseas.
Implications for Your Financial Planning
Estate and Inheritance Tax Planning
The new IHT rules affecting pensions and agricultural/business property reliefs may impact legacy planning. Early estate planning and reviewing wills to maximise available reliefs may be beneficial.
Capital Gains Planning
If you hold assets with unrealised gains, it may be worth reviewing your capital gains strategy to minimise tax exposure under the new rates.
Pension and Retirement Planning
The changes to pension inheritance tax rules make it essential to reassess pension income strategies, particularly if you had planned for pension savings to pass tax-free to beneficiaries.
Conclusion
These changes bring both challenges and opportunities. At Mather & Murray Financial, we’re here to help you assess the impact of these Budget changes on your financial plans. Contact us to schedule a review with your financial adviser or BOOK A CALL BACK here.
