Autumn Budget 2024 in the UK

On 30 October the Autumn Budget 2024 was delivered by the Chancellor. The Budget aim is to recoup £40 billion to reinforce the NHS and the foundations of the UK for economic stability. Key points from this budget focus on tax measures impacting employment, pensions, and individuals residing in the UK, including non-domiciled individuals.

Income and National Insurance Contributions (NICs) Rates:

• The government will not increase the basic, higher, or additional rates of income tax, nor the employee and self-employed NIC rates.
• Employer NICs: Starting April 2025, the employer NIC rate will rise from 13.8% to 15%. Additionally, the threshold for employer NICs will be lowered from £9,100 to £5,000 annually.
• Employment Allowance: This allowance will increase from £5,000 to £10,500, and the £100,000 eligibility cap will be removed, broadening access to this benefit.

Non-Domiciled (“Non-Dom”) Individuals:

• Current Non-Dom Tax Benefits: Non-doms who are UK residents currently only pay UK tax on UK income and foreign income brought into the UK under the remittance basis regime.
• Abolition of Current Regime: The government will eliminate the remittance basis system by April 2025.
• New Non-Dom Regime: Under the revised system, new non-doms residing in the UK (after a 10-year non-residency) will enjoy a four-year tax-exempt period on eligible foreign income, after which UK tax applies.
• Transitional Support: For current non-doms, the budget introduces measures like rebasing certain capital assets’ values to 2017 and a Temporary Repatriation Facility for bringing in foreign income at reduced tax rates.

Carried Interest Tax Changes:

• Beginning April 2026, carried interest (income from investment performance) will face a flat tax rate of 34.625% (including NICs). Additional rules are under consultation to qualify for this rate, such as co-investment requirements and a minimum holding period.
• As an interim measure, the capital gains tax rate on carried interest will increase to 32% starting April 2025.

Employee Ownership and Benefit Trusts:

• The government plans to update the tax rules on Employee Ownership Trusts and Employee Benefit Trusts to preserve their intended benefits while preventing unintended tax advantages. This action follows a review intended to ensure these trusts support employee ownership without misusing tax benefits.

Electric Company Car Benefit-in-Kind (BIK) Rates:

• BIK rates on fully electric vehicles will remain as previously announced until the 2028–29 tax year. Starting in 2028–29, these rates will increase by 2% each year through 2029–30, potentially impacting tax costs for employees with electric company cars.

Overall, this budget aims to balance fiscal discipline with targeted support for workers, employers, and specific groups of residents.

Need help navigating the Autumn Budget 2024 tax changes? Our experts are here to guide you through the new regulations impacting employment, pensions, and non-domiciled residents. Get in touch today to ensure you’re fully prepared and taking advantage of available benefits!