2024 Autumn Statement Update

Written by Andrea Solana, CFP™

On the 30^th of October 2024, Chancellor Rachel Reeves delivered her first 2024 Autumn Statement, the first by a Labour Government in 14 years and one which was described as a ‘Budget to fix the foundations of the economy and deliver change by protecting working people.’

There was much anticipation and speculation in the lead up to this Statement, with changes to Capital Gains taxes, Inheritance taxes and the current Non-Dom regime confirmed.

We have summarised the information we believe to be most relevant below:

Growth, Inflation and Debt

The Office for Budget Responsibility (OBR) expects the UK economy to grow by 1.1% this year followed by:
- 2% in 2025,
- 8% in 2026,
- 5% in 2027 and 2028, and
- 6% in 2029.
Inflation is expected to be 2.5% this year followed by:
- 6% in 2025,
- 3% in 2026,
- 1% in 2027 and 2028, and
- 2% in 2029.
Government borrowing this year is expected to be £127b. Borrowing as a percentage of GBP is expected to fall over the five year period from 4.5% to 2.5%.
A 2% savings target has been set across all government departments moving forward.

Business

To provide businesses with certainty moving forward, the government has committed to capping corporation tax rates at 25% for the duration of Parliament with reliefs of full capital expensing, the annual investment allowance, and R&D relief rates maintained.
Secondary Class 1 employer National Insurance Contributions will increase by 1.2%, taking the rate from 13.8% to 15% from April 2025. The salary threshold at which companies pay the secondary threshold will also be lowered, from £9,100 to £5,000 per year.
A lifetime limit of £1m will continue to apply to Business Asset Disposal Relief (BADR). Current Capital Gains tax rates will be maintained at 10%, with an increase to 14% in TY2025-26 and an increase to 18% in TY2026-27.
VAT assessed on private school fees will be introduced from January 2025, with legislation to be unveiled soon to remove Business Rates relief from April 2025.

Personal Taxes, Pensions, Savings and Investments

The main rate of Class 1 employee National Insurance Contributions will remain at 8% on earnings between £12,570 and £50,200 per year.
As a reminder, the Personal Allowance threshold of £12,570 remains unchanged as does the Higher Rate Income Tax Band of £50,270.
The threshold in which the Additional Rate Income Tax Band begins to apply continues to be £125,140.
Income tax bands will remain frozen until April 2028 with personal tax thresholds increasing with inflation thereafter.
The Capital Gains Tax Allowance will remain at the current £3,000.
The tax rates applicable to capital gains on asset sales other than property will increase from 20% to 24% from 30 October 2024 for Higher and Additional Rate taxpayers (the 10% rate for Basic Rate taxpayers will increase to 18%).
The capital gains tax rate assessed on carried interest from April 2025 will be increased from 28% to 32%. Further consultations will take place regarding conditions of access into the new regime.
The capital gains tax on the sale of a second residential property will remain at the current 24% rate for Higher and Additional Rate taxpayers (the 18% rate for Basic Rate taxpayers will also remain unchanged).
Stamp Duty Land Tax (SDLT) for second homes will increase by 2% to a rate of 5% effective on exchange of contracts that take place after 30 October 2024.
The Dividend Tax Allowance will remain at the current £500. Dividend tax rates will remain as follows:
- Basic Rate – 8.75%
- Higher Rate – 33.75%
- Additional Rate – 39.35%
The Annual Allowance for Adult ISA’s and Junior ISA’s will remain at £20,000 and £9,000, respectively.
Plans for a British ISA previously announced during the Spring Statement in March 2024 have been scrapped following consultation.
As a reminder, the current Annual Allowance for pension contributions is £60,000 with tapering of the Annual Allowance beginning at £260,000. The Money Purchase Annual Allowance as well as the minimum tapered allowance, remains at £10,000.
The Government confirmed its commitment to the State Pension Triple Lock for the duration of Parliament.
State Pension benefits will increase by 4.1% in TY2025-26, in line with earnings growth.
With respect to IHT, the current Nil Rate Band threshold of £325,000 will continue to remain frozen until April 2030.
The current additional Residence Nil Rate Band of £175,000, available to individuals who pass on their UK real estate to a direct descendent of the deceased, will remain frozen and continue to taper away by £1 for every £2 where net estates are worth more than £2,000,000.
Inherited pensions will be brought into the scope of inheritance tax from April 2027.
Reform has been announced on Agricultural Property Relief (APR) and Business Property Relief (BPR) with the introduction of a combined 100% relief limit of £1m from April 2026. Assets over this relief limit will receive 50% relief meaning an IHT rate of 20%.
Alternative Investment Market (AIM) shares will also attract an effective IHT rate of 20%.

Non-Domicile Regime Changes

The Government will follow through with the abolition of the non-UK domicile tax regime and will replace it with a residency based tax regime from April 2025.
All new arrivals from 6 April 2025, will be entitled to receive full tax relief on foreign income and gains (FIG) for the first four tax years that they are resident in the UK provided they have been a non-UK tax resident for the 10 consecutive years prior to arrival. All FIG earned during this period will be allowed to be brought onshore to the UK without an additional tax charge.
Any existing Non-Dom tax residents, who have been tax resident for fewer than four tax years as of 6 April 2025, will be entitled to benefit from full relief until the end of their fourth tax year of residence.
There is not requirement for an individual to claim the FIG exemption in each of the first four tax years. Additionally, individuals can decide to make a claim on just foreign income or just foreign gains or both. Additionally, it is not necessary to claim relief on all sources of FIG. To the extent any claims are made, the individual will lose entitlement to claim the Personal Allowance and Capital Gains Tax Allowance for the applicable tax year.
Overseas Workday Relief will be retained and reformed, with the relief extended to a four-year period as opposed to the current three-year period. Income claimed under this relief will no longer need to remain in (or be paid to) an offshore account. The amount claimed annually will be limited to the lower of £300,000 or 30% of the employee’s net employment income.
Individuals who have been tax resident in the UK for more than four tax years as of 6 April 2025 will be subject to UK taxation on an arising (worldwide) basis, meaning that all FIG will be taxed annually in the UK, similar to other UK domiciled or UK deemed domiciled individuals currently.
The protection from tax on FIG arising within settlor-interested trusts will no longer be available for those settlors who do not qualify for the four-year FIG regime from April 2025. FIG that arose in protected non-resident trusts prior to April 2025 will not be taxed unless distributions or benefits are paid or deemed to be paid to UK residents who do not qualify for the four-year FIG regime. FIG which arose within the trust structure before April 2025 will be taxed on UK resident settlors or beneficiaries who do not qualify for the four-year FIG regime if these are matched to worldwide trust distributions received.
From 6 April 2025, All UK residents’ worldwide assets will be within scope of UK inheritance tax once they have been long-term resident in the UK, a definition of being resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event (including death) arises. Individuals will remain in scope for between 3 and 10 tax years after leaving the UK . The time the individual remains in scope after leaving the UK will be shortened where they have been resident in the UK for between 10 and 19 years.
- Any non-dom or deemed domiciled individual who is non-resident in TY2025-26 or prior will only remain in the scope of UK IHT until their fourth year of non-residence.
Subject to transitional points, the excluded property status of non-UK settled trusts will only be considered excluded property for IHT purposes at times where the settlor does not meet the definition of long-term resident in the UK. When a settlor meets the definition of a long-term resident, any assets they settled will be subject to IHT.
- Existing non-UK assets within an excluded property trust settled prior to 30 October 2024 will benefit from transitional protections from the long-term residences rules.
- Any additions or new settlements made on or after 30 October 2024 will be subject to the interest in possession and gift with reservation rules as they apply in accordance with the new long-term residence rules. If an existing interest in possession benefit ends, any new entitlement for another individual such as a spouse will be subject to the new long-term residence rules.
Given the scale of the announced changes, the Government intends to offer the following transitional arrangements for existing non-doms currently or previously taxed on the remittance basis:
Capital assets owned as of 6 April 2025 have the opportunity to be ‘rebased’ to their market value as of 5 April 2017.
Any untaxed FIG earned prior to 6 April 2025 will have the opportunity under a Temporary Repatriation Facility (TRF) for a three-year period from TY2025-26 to be remitted at a reduced rate of tax once remittance basis taxation has ended. The flat rate tax will be 12% for the first two years and 15% in the final year. The Government has expanded the scope to include offshore structures (including unattributed FIG held within trust structures) in addition to personally held assets. If a UK resident settlor or beneficiary of a non-resident trust previously paid tax on the remittance basis and receive a benefit from the offshore trust structure during the three-year period, they can benefit from the TRF reduced rates as long as the benefit is able to be matched against FIG that arose within the settlement prior to 6 April 2025.
- Individuals who designate amounts under TRF and pay tax on these amounts will not have a requirement to remit these funds to the UK during the three-year period. The funds can be remitted during a later tax year.
- Designated amounts will automatically rise to the top of the mixed fund ordering rules and will always be treated as remitted to the UK in priority to any other amounts, regardless as to the year these amounts relate.
- Designated amounts will be an amount net of foreign tax that may have been paid on the FIG. It will not be possible to claim a credit in the UK for that foreign tax.

These are just a few of the changes that were outlined today along with confirmation of what remains without change from prior announcements.

Source of economic data: The Office of Budget Responsibility; Source of budget information: Chancellor Reeves budget speech to the House of Commons, HM Treasury Policy paper and Technical Note: Reforming the Taxation of Non-UK Domiciled Individuals published 30 October 2024

Important Information

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Nothing in this document constitutes investment, legal or fiscal advice and should not be construed as such.
This document is provided for information purposes only and is not intended to be relied upon as a forecast, research or investment advice.
This document does not take into account the specific goals or requirements of any particular individual.
MASECO gives no assurance or guarantee that the information is accurate or complete and it should not be relied upon as such.
Information about tax changes is based on our understanding of the changes announced by the Chancellor. However, MASECO is not a tax specialist and we recommend that anyone considering investing seeks their own tax advice.
The extent of the benefit (if any) of the measures announced in the Budget and summarised herein will depend on the individual circumstances of each client and may be subject to change in the future.

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