2024 Autumn Budget: What does it mean for investors?
2024 Autumn Budget: What does it mean for investors?
Introduction.
The 2024 Autumn Budget has introduced several significant changes that impact higher earners, private investors, landlords, and second-home owners. From adjustments to property-related taxes to broader capital gains and inheritance tax reforms, these measures signal a shift toward increased tax contributions from wealthier individuals and those with private investments.
Understanding the implications of the key changes in the 2024 Autumn Budget is crucial for investors. Here’s a breakdown of these changes and what they mean for you. You can download the full budget PDF below.
Property-related tax changes.
The Autumn Budget introduced several tax changes that could significantly impact your property investments. These measures, designed to increase contributions from property owners, could reduce net returns on your property investments.
Higher stamp duty land tax (SDLT) on additional properties.
From 31 October 2024, the SDLT surcharge on additional properties, such as second homes and buy-to-let investments, will increase from 3% to 5%. This change raises the initial cost of purchasing investment properties, which will be felt acutely by landlords and second-home buyers, potentially making property investment less attractive and adding to the cost of owning a second home.
Changes to capital gains tax across all assets.
The budget has also made sweeping changes to the broader capital gains tax structure, affecting a wide range of assets beyond property. Private investors need to be alert to these higher rates, as they could significantly influence investment choices and timing.
Higher general CGT rates on non-property assets.
From October 2024, the CGT rate on the sale of other assets, such as stocks, shares, and non-property investments, will also rise. Basic rate taxpayers will see their rate increase from 10% to 18%, and higher rate taxpayers from 20% to 24%. This increase may impact your decision to sell assets and could encourage longer holding periods to minimise tax outflows.
Reduced reliefs on business and investment assets.
Changes to the lifetime limits for Business Asset Disposal Relief and Investors’ Relief also have broad implications. The lifetime limit has been reduced to £1 million, limiting the tax benefits available to business owners and investors when selling qualifying assets. This adjustment likely creates a higher tax burden for those planning to use these reliefs for tax efficiency on disposals. It, therefore, may prompt a reassessment of exit strategies for certain investments.
Inheritance tax (IHT) changes affecting estate planning.
The budget also introduces new rules for inheritance tax (IHT) that impact estate planning for those with significant pension and property assets. These changes make it harder to minimise IHT liabilities, affecting those who have planned to use pension funds or agricultural property for wealth transfer.
Inclusion of pension pots in IHT.
Starting from April 2027, unspent pension funds and death benefits will now be included in estates for IHT purposes. This reverses previous allowances that excluded pensions from IHT, which had made them a popular vehicle for intergenerational wealth transfer. This change could significantly increase IHT liabilities for those with substantial pension holdings.
Restricted reliefs for agricultural and business properties.
From April 2026, the full 100% IHT relief for agricultural and business properties will apply only to the first £1 million of value, with a reduced 50% relief on any value beyond this threshold. This adjustment increases potential IHT liabilities on high-value estates with substantial rural or commercial assets, impacting those who rely on IHT relief to maintain family-owned agricultural or business assets.
Other relevant changes for private investors.
In addition to the changes above, several other budget measures will affect higher earners and private investors, including the freezing of allowances and thresholds for various tax-efficient savings and income taxes.
Frozen ISA and lifetime ISA allowances.
The Individual Savings Account (ISA) allowance remains frozen at £20,000, and the Lifetime ISA allowance at £4,000 until 2030. This freeze limits the inflation-adjusted growth of these tax-efficient savings vehicles, affecting those aiming to maximise tax-free savings over the long term. For those relying on ISAs as a shield from capital gains and dividend taxes, this effectively caps the true value of tax-free savings.
Freezing of personal income tax thresholds.
Income tax thresholds have been frozen until April 2028. As incomes rise with inflation, more individuals will be pushed into higher tax brackets, a phenomenon known as “fiscal drag.” For higher earners, this freeze effectively increases tax liabilities over time, reducing disposable income and available capital for investments.
National Insurance changes for business owners.
The 2024 Autumn Budget also introduced substantial National Insurance (NI) changes that will affect many business owners, particularly in managing payroll costs. These NI changes highlight the government’s focus on raising revenue to support public finances, with an approach that places a heavier burden on larger businesses while potentially providing targeted relief for smaller employers
Increased employer NI contributions.
From 6 April 2025, the rate of employer NI contributions will increase by 1.2 percentage points, from 13.8% to 15%. This higher rate will raise the cost of employing staff, significantly impacting businesses with larger workforces and higher wage bills. Employers will need to budget for this increase, which could influence hiring decisions and broader workforce strategies.
Reduced NI contribution threshold.
In addition to the rate increase, the annual per-employee threshold for employer NI contributions (the Secondary Threshold) will be lowered from £9,100 to £5,000. This change effectively means employers will start paying NI on lower earnings per employee, further raising payroll expenses.
Expanded employment allowance.
To counterbalance the increased NI costs, particularly for smaller businesses, the government will raise the Employment Allowance from £5,000 to £10,500 from April 2025. This allowance will apply to all eligible employers, removing the previous £100,000 threshold for eligibility. This expanded support means that approximately 865,000 small employers will be exempt from NI contributions altogether, offering some relief for businesses most impacted by the increased rates.
Conclusion.
The 2024 Autumn Budget has introduced a range of measures that increase the tax burden on property ownership, investment returns, and wealth transfers, particularly affecting higher earners, landlords, and private investors.
By raising capital gains tax rates, tightening inheritance tax reliefs, freezing tax thresholds and making significant changes to National Insurance, the budget signals a shift toward higher contributions from wealthier individuals and those with substantial investment assets and business owners. For private investors and higher earners, these changes make careful tax planning even more critical to protect long-term wealth.
What’s next?
For a clear path forward amidst these changes, it’s essential to have a strategy tailored to your personal financial goals. The 2024 Autumn Budget presents new complexities that can significantly impact property owners, investors, business owners and those with substantial estates.
Our experienced independent financial advisers at AV Trinity can help you understand how these tax changes affect your investments, property holdings, businesses and long-term financial plans.
Contact us today to discuss how we can help you adapt to these changes and optimise your financial plan for the future; we offer a free initial consultation and work with clients across the UK.
Don’t forget, this article offers general financial information and should not be taken as personal advice. Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.