UK autumn budget 2024: how it affects your wealth

This week, the Labour government published its first budget since returning to power in July 2024.

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“This is not the sort of Budget we would want to repeat,” claimed Chancellor Rachel Reeves, as she delivered ahost of measures designed to “wipe the slate clean and to put our public finances on a firm trajectory.”

What are the main wealth-related headlines from the budget, and how do they affect your financial planning?

A potential increase in inheritance tax‍

Those currently looking at estate and retirement planning may now be required to pay inheritance tax after the inheritance tax (IHT) threshold was frozen for a further two years to 2030.

Significantly, Reeves also announced that inherited pensions would come into the IHT from April 2027.  Pensions don’t generally qualify for the IHT, and are typically passed on tax-free if holders pass under the age of 75.Should they pass after age 75, their pension is usually taxed at the beneficiaries’ marginal rate of income tax.

Employees to pay less NI, while employers pay more‍

One major measure outlined in the budget was a change in national insurance contributions that aims to raise £25bn per year by the end of the forecast period. Reeves declared that employees will not pay more directly, but employers’ NI contributions would rise by 1.2 percentage points to 15% from April 2025. A secondary threshold will also be reduced when contributions are due, falling from £9,100 to £5,000.

In positive news for small businesses, the employment allowance will increase from £5,000 to £10,500, cutting the national insurance liability for smaller companies.

Capital gains tax have increased immediately

Capital gains tax (CGT) has immediately risen, with the lower rate jumping from 10% to 18% and the higher rate from 20%to 24%. Investments couldn’t avoid the rise also. The maximum CGT paid on profits from selling shares has increased from 20% to 24%. Despite the rise, the annual £3,000 CGT allowance remains untouched.

No additional freeze on income tax

In a relief to many, Reeves’ budget declared no additional freeze on income tax thresholds. As a result, from the2028/29 tax year, income tax thresholds will rise alongside inflation, easing the tax burden for millions.

VAT on private school fees

Many households will now face paying20% VAT on private school fees from January 2025 after a previous exemption was removed. The move could complicate the educational choices for families seeking independent education for the next school year and beyond, with some expecting a spike in the number of private school children moving to state education.

Non-dom status abolished

Labour had previously promised to abolish the UK’s non-domicile tax status, and the October budget confirmed the move, taking effect from April 2025. Taking its place is a residence-based scheme that aims to incentivise investors and attract wealthy individuals through “internationally competitive arrangements,” claims Reeves.

Reeves did announce a three-year Temporary Repatriation Facility (TRF). Through theTRF, individuals can assign foreign income and other gains earned under the current remittance arrangement — but which haven’t yet been brought to the UK —to be taxed at a special rate of 12 per cent. The rate applies to elections made from April 6 2025 to April 5 2027, rising to 15 per cent from April 6 2027until April 5 2028.

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Eager to find out how the October 2024 budget will affect your income and wealth planning, and what you can do in response? Reach out to the Reckon team to discuss your next move.