Autumn Budget 2024: Summary of tax changes for individuals

It’s the first Budget with a female Chancellor, and Rachel Reeves has said the measures will raise taxes by £40 billion. But what does the Labour government’s Autumn Budget 2024, and the drive for economic growth, mean for you?

Inheritance Tax

The current Inheritance Tax (IHT) thresholds will be frozen until 5 April 2030. This means that the tax-free Nil Rate Band of £325,000 will remain, as will the Residence Nil Rate Band (RNRB) of £175,000. When these bands are passed to a surviving spouse or civil partner, they can still benefit from up to £1 million free of IHT. The RNRB will continue to taper after £2 million. 

Inherited, unused pensions and pension death benefits will be subject to IHT from 6 April 2027. They will then be brought into a person’s estate, to calculate the overall IHT payable. 

Business Relief & Agricultural Relief

From April 2026, the first £1 million of combined agricultural and business assets will still receive IHT relief. For assets over this threshold, IHT will apply with a 50% relief (therefore, taxed at 20%, rather than 40%). The government says that this will continue to protect small family farms.

Shares not listed on a recognised stock exchange, such as AIM shares, will now attract a 50% business property relief, rather than the previous 100%. 

Capital Gains Tax

No surprises here – Capital Gains Tax (CGT) rates will increase. The basic rate will rise from 10% to 18%, and the higher rate will rise from 20% to 24%, bringing these in line with the residential CGT rates which were amended earlier this year by the last government. This change will take effect from 30 October 2024. There will be no increase on the 24% CGT rate on second properties. 

The CGT rate on carried interest has been increased from 28% to 32%.  

The Investors’ Relief lifetime limit will be reduced from £10 million to £1 million on qualifying disposals made after 30 October 2024. This will now match the lifetime limit for Business Asset Disposal Relief, and will be legislated in the Finance Bill 2024-25. 

The Business Asset Disposal Relief rate will increase to 14% from 6 April 2025, and then again to 18% from 6 April 2026.

Non-dom regime

The impacts of the budget on international families are widespread, and deserve an article of their own, click here to read a brief summary of the changes. 

In the meantime, we know there are undoubtedly many high net worth and international families who are considering whether the UK remains the right place for them. However, as is the case under any taxation regime, there are opportunities for some, and options for everyone.

Overall, the government’s aims are to close the “tax gap” and bring about the change that Rachel Reeves said the UK voted for. If you need further advice on these tax changes, then please get in touch to discuss your options with Mills & Reeve, who can advise on all aspects of tax and estate planning.