Key announcements in the Autumn Budget 2024
Our experts have analysed the key announcements from today's Autumn Budget.
Changes to Employer’s Class 1 National Insurance
Justine Riccomini (Head of Employment and Devolved Taxes at ICAS) said:
“It’s Britain’s businesses who will carry the £23.8bn burden of the Chancellor’s decisions to lift employers’ national insurance contributions (NICs) and increase minimum wage payments from April 2025.
“A drop in secondary NICs thresholds add an additional cost to employers' pay bills of £615 per annum, per employee, from 6 April 2025.
“The announced NIC increase and drop in the threshold at which businesses start paying, is ultimately an own goal on growth. While it’s reassuring for businesses to hear that the amount that small employers can claim back from their national insurance bill has risen from £5,000 to £10,500, the additional strain on businesses will be felt by medium and large businesses across the country. At a time when many are already struggling with cashflow problems against the backdrop of changes to the Employment Rights Bill, these measures could be disastrous.
“An employer with 20 employees might have an annual total pay bill of £1,000,000. The secondary NICs on that would currently be £112,884 if levied on earnings above £9,100 with no entitlement to Employer’s Allowance. But if the earnings threshold drops to £5,000 and the NI rate increases to 15%, it will represent a cost of £135,000 less a maximum of £10,500 Employment Allowance. This represents a fixed cost increase of 10.3%, which would need to be included in the employer’s budgeting forecasts and cash flow projections. This of course doesn’t take into account bonuses, commission, future pay rises or new recruits.
“Another concerning outcome of the increase in employer’s NICs is that it may lead to downturns in recruitment, making competing for jobs even harder, affecting unemployment figures. This could lead to rises in jobseeker’s allowance and related welfare claims. Promotions, bonuses, commissions and pay rises may also be obstructed unless ‘anti-forestalling legislation’ is published. This could potentially happen with pension salary sacrifice as well. Some businesses could decide to abandon pay rises and bonuses for the foreseeable future.
“A major concern with secondary NICs rises amounting to £23.8bn, is that it might encourage employers to take on staff under false or bogus self-employment terms, off-payroll working, or IR35. There are already huge problems with unregulated Umbrella Companies and Managed Service companies and this proposal to raise NICs could increase these problems.
“From April 2026, the government will pass legislation to ensure that either recruitment agencies, or end-client businesses (where there is no recruitment agency) will apply and account for PAYE on payments made to workers supplied via umbrella companies. A paper has been published alongside the Budget which gives more information to those involved – but fundamentally, the underlying problem of employment status in the UK is not being addressed holistically, which is badly needed.”
“While it is reassuring to see measures aimed at supporting those on the lowest incomes, such as the announced raises in national minimum wage, employers' NIC increases could mean firms look to mitigate these additional employment costs by means that directly impact working people's pockets. Firms are likely to compensate for the additional costs by limiting pay rises, freezing recruitment plans and pausing employee benefits, or even paying a lower rate of pension contribution. These knock-on effects may directly impact working people’s wealth while stifling business growth.”
Rise in National Minimum Wage
Justine Riccomini, Head of Employment and Devolved Taxes at ICAS, said:
“The rise in National Minimum Wage from 1 April 2025 for over 21s to £12.21 per hour – a 6.7% rise from £11.44 - equates to a rise of around £1,400-£1,500 per annum FTE (full time equivalent) depending on hours worked. It brings the salary of a full-time worker, working 37 hours a week to £23.5K per annum, up from £22K per annum. The additional secondary national insurance contributions (NICs) cost of 1.2% results in additional secondary NICs of £217.5 per FTE employee.
“Additional pension contributions may also arise, depending on the pension provider and the agreed employers’ pension package with employees.
“Some negative consequences could be that employers may decide to limit pay rises for those employees above national minimum wage (NMW) to compensate for the additional cost of salaries, pensions and secondary NICs. Employers may also decide to limit recruitment for the same reasons. Employers may be tempted to push more workers into false or bogus self-employment contracts, off-payroll working, or IR35.”
Freezing of Income Tax thresholds
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“While the main rates of Income Tax and Employee’s Class 1 National Insurance have not increased, continuing the freezing of tax thresholds announced by the previous government will result in individuals paying additional tax. This is because more of their income will be taxable, or more taxable at higher rates than would have been the case. We feel that increasing the tax take in this way goes against the principles of tax simplification. Whilst it may not align with the government's political objectives, increasing tax rates rather than freezing thresholds would be a more transparent way of increasing additional revenue for public services. It’s therefore encouraging that from 2028/29, tax thresholds will increase in line with inflation.”
Corporation Tax
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“We welcome the Chancellor's decision to confirm that the main rate of Corporation Tax will not increase from the current 25% for the lifetime of this parliament. Our members tell us how companies make investment decisions for the long term, decisions which have an impact on the strength of the overall UK economy.
“We feel that the publication of the business tax road map, combined with clarity over the capital allowances and Corporation Tax rates, will assist companies when making their investment decisions and help plan their cash flows at a time of economic uncertainty.”
Capital Allowances
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“We welcome confirmation that companies will still be able to claim full expensing on their qualifying plant and machinery additions and that both companies and unincorporated businesses will be able to claim £1 million in annual investment allowance, subject to the usual criteria. But we believe that the Chancellor should have gone further by extending full expensing to include expenditure on used plant and machinery as well.
“Our members tell us that supply issues can affect the availability of new plant and machinery within an acceptable timescale. While the annual investment allowance (AIA) is available, this is limited to £1 million of qualifying expenditure per year. This will be sufficient for most businesses, but there will be many larger businesses who won’t receive upfront tax relief in the year of purchase.”
Changes to tax rules on double cab pick-ups
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“Earlier this year, the previous government caused significant confusion when HMRC announced a change in its guidance on the benefit in kind and capital allowances treatment of double cab pickups. This meant that they would no longer follow the VAT rules and would be treated as cars instead of vans from July 2024, for it only to abandon the change a week later. The government has now confirmed that double cab pickups will be treated as cars where they are bought from 6 April 2025, in a change to the initial ‘u turn’ announced earlier this year. This creates an element of uncertainty, but at least there is a short time for businesses to consider how the change will affect them and their employees before it is implemented.
“We welcome the fact that vehicles purchased before that date will be able to continue claim the existing capital allowance treatment and that leased double cab pickups will be able to claim the existing treatment until 5 April 2029 (or the lease expiry if earlier).”
Justine Riccomini, Head of Employment and Devolved Taxes at ICAS, agrees. She added:
“The additional burden to those employers who will need to continue to provide these vehicles for genuine business reasons is significant as these vehicles have a high market value and engine size, and they will incur significant benefit in kind charges with further amounts of employer’s Class 1A NICs at 15% chargeable on them. It’s likely that people may consider cancelling fleet orders (as happened back in February) and considering alternative options. The double-cab pickup manufacturers will probably have to go back to the drawing board to make their vehicles lighter and more environmentally friendly. Scottish landed estates will be likely to need to consider their budgeting forecasts and make decisions about what to do going forward.”
Capital Gains Tax changes
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“While aligning the Capital Gains Tax rates for disposals made on or after 30 October 2024 to avoid the differential between residential property and other assets could be seen as a simplification, the increase in Capital Gains Tax rates for disposals covered by Business Asset Disposal Relief (BADR) could act as a disincentive for individuals to invest in their business. The lifetime limit for gains covered by BADR will not be increased (despite it applying on gains from 2008, but the tax rate for gains covered by BADR will increase from the current 10% to 14% from 6 April 2025 and 18% from 6 April 2026. This will still be lower than the new 24% rate of Capital Gains Tax for higher rate taxpayers for other gains but is significantly higher than has been charged in recent years. This could impact investment needed to create the growth and job opportunities needed to expand the economy.”
Inheritance Tax changes
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“The Inheritance Tax announcements will bring more estates into the scope of Inheritance Tax, as the current freeze of thresholds will be extended for a further two years to 2030 at a time when house prices in many parts of the UK are increasing. Whilst there are no changes to the residence nil rate band, we feel that the Chancellor missed an opportunity to consider simplification measures. These include merging the nil rate band and residence nil rate band, so that it would no longer necessary for an estate to include a residence being left to a direct descendant to qualify for a combined nil rate band of £500,000 (£1 million per couple).
“The changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026 will see those reliefs being halved once the value of a qualifying asset exceeds £1 million and this could significantly increase the tax payable on family businesses, particularly in the agricultural sector. Time will tell as to whether this influences decisions on when to pass on the family business to the next generation, but the reduced availability of APR and BPR may reduce the incentive to hold on to assets until death.
“Changes to include BPR from 6 April 2026 to halve the relief for investments on the Alternative Investment Market (AIM) and the inclusion of unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes from 6 April 2027 is likely to have a significant effect on the tax planning being carried out for high net worth individuals in the coming months.”
Abolition of the Furnished Holiday Lettings regime
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“Since the Spring Budget announcement of the proposed abolition of the Furnished Holiday Lettings (FHL) rules, our members have raised concerns with us about the impact of the changes on their clients. This was particularly the case on the application of the anti-forestalling rule for Capital Gains Tax (CGT), which will take effect from 6 March 2024.
“In our response to the government’s consultation, we drew attention to how the proposed changes to the definition of ‘relevant earnings’ for pension purposes would impact taxpayers who operate a FHL portfolio as a full-time occupation, in comparison with the less onerous time commitment associated with a portfolio of properties let out for longer-term rental. Our members raised concerns about the ability for a taxpayer to pay Class 2 National Insurance contributions when they run a FHL business but don’t have any other sources of employment or self-employment income.
“We also highlighted how the exclusion of FHL income from the definition of relevant earnings would create a distinction between those who operate a FHL business as an individual, compared to operating through a company.
“We are disappointed that our concerns don’t appear to have been taken into account in the final legislation on the abolition of FHLs and these issues remain valid concerns of the members who have contacted us in significant numbers about the impact of the changes.”
High Income Child Benefit Charge
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“High Income Child Benefit Charge (HICBC) increases the complexity of the tax system and there has been a growing level of tax case law in recent years where taxpayers have been caught out by an unexpected tax liability when their income exceeded the threshold. We supported the previous government’s decision to increase the threshold, whilst recognising the need for wider reform.
“We were sceptical, however, of the suggestion of basing the HICBC liability on household income as we feel it’s important that any reform does not jeopardise the importance of independent taxation. We are also mindful of the challenges that household income brought to the Tax Credits system, especially where there is a change of income or circumstances."
“We therefore welcome the announcement that HICBC will not be based on household incomes in future and that HMRC will make it easier for taxpayers to get their HICBC liability correct. This includes the ability to report Child Benefit payments through a PAYE coding notice from April 2025 and pre-prepopulate Self-Assessment tax returns with Child Benefit data.”
Making Tax Digital (MTD) for Income Tax
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS, said:
“When the previous government announced in December 2022 that the legal requirement for unincorporated businesses and landlords to submit quarterly updates would be extended until April 2026 (for those with a gross income above £50,000) and April 2027 (for those with a gross income above £30,000) this was welcomed. It’s widely accepted that neither HMRC nor the taxpayers affected (nor their agents) would have been ready for the original April 2024 timescale for self-employed taxpayers and landlords with gross income above £10,000.
“Today’s announcement that MTD for Income Tax will be extended to sole traders and landlords with gross income over £20,000 by the end of this Parliament feels premature at this stage, given the issues we identified as part of our response to HMRC’s Small Business Review in 2023.
“We support MTD for Income Tax as a concept and are encouraging our members to register some of their clients for the current trial, but we feel that it is important for HMRC to fully evaluate the success of MTD for unincorporated businesses and landlords with income above £50,000 (from April 2026) and £30,000 (from April 2027) before moving the goalposts to require even smaller, unincorporated businesses and landlords to have to submit quarterly updates.”
Changes to HMRC interest charges
Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes at ICAS, said:
“The Chancellor announced that HMRC interest rates charge on unpaid tax will increase by 1.5% from April 2025. Whilst this will act as a disincentive to use HMRC as an alternative to (potentially more expensive) bank funding, HMRC interest rates already take account of changes to the Bank of England base rates.
“However, no changes have been announced to the interest rates paid on repayments on tax, which is overpaid, and our members regularly tell us that their clients have to wait a significant period for their tax repayments from HMRC. In some cases, this can have an impact on cashflow at a time when there are significant cost pressures for businesses, including the additional costs for businesses announced in the Budget.
“We want to see HMRC use the resources promised by the Chancellor to deliver better customer services to our members when supporting their clients and make sure that repayments due to taxpayers are paid out in a timelier manner.”
Regulation of the tax advice market
Susan Cattell, Head of Tax Technical Policy, said:
“The government has published a response to the consultation on ‘strengthening the regulatory framework in the tax advice market’– and set out the next steps.”
Controls on access to HMRC’s agent services
Susan Cattell, Head of Tax Technical Policy, said:
“We welcome the announcement of improvements to HMRC’s tax practitioner registration services and the introduction of mandatory registration of tax practitioners who interact with HMRC from April 2026. HMRC needs to know who it’s dealing with and be able to track poor behaviour across different cases handled by an agent. However, the system will need to be robust and include measures to prevent ‘bad actors’ improperly using another agent’s credentials or their client’s credentials. We look forward to contributing to the promised technical consultation on the details.”
Strengthening the regulatory framework
Susan Cattell, Head of Tax Technical Policy, said:
“It’s disappointing that no definite decisions have been made on action to strengthen the broader regulatory framework. However, it’s clear that responses to the consultation varied on the right approach to be taken, so we understand why the government has decided to undertake further work with the sector to consider the options. We agree that it’ is important that any regulation should be proportionate and well-designed to address the problems – and it’s important that the costs and burdens are minimised. We look forward to further engagement.”
Targeted reforms
Susan Cattell, Head of Tax Technical Policy, said:
“We support the introduction of a requirement for tax practitioners who want to submit an income tax repayment claim on behalf of a client, to obtain an Advanced Electronic Signature from their client to prove they have been authorised to make the claim. This should reduce the scope for abuse of the system.
“We also welcome the announcement of a forthcoming consultation on measures to enhance HMRC’s ability to act against a tax practitioner where the practitioner facilitates a taxpayer’s non-compliance. It is important that HMRC does more to act against ‘rogue’ practitioners.”
Public Services
Sarah Chisnall, Director of Public Affairs at ICAS, said:
"We all know that public services need investment, especially the NHS, but we need to know how these improvements will be managed and measured to make sure the investment is properly spent. Productivity is an issue for both the private and the public sectors.”
