We’ve distilled the key takeaways from the first Budget delivered by a UK Labour government in over 14 years, focusing on the most significant implications for our clients and the broader economy.
DY’s Martyn Bramwell stated that there had been numerous warnings before the announcement of a ‘painful’ budget, focusing on economic growth.
“At first glance, for individuals the warnings were maybe overstated, but that’s certainly not the case for businesses.”
Martyn’s key takeaways were:
- National insurance to rise both in terms of percentage points, from 13.8% to 15%, but also via a drop in thresholds – the point where Employers’ National Insurance is paid – from £9,100 to £5,000 from April 6, 2025 to April 6, 2028.
- Individual ISA, Junior ISA, Lifetime ISA, Child Trust Fund rates and Starting Rate tax on savings have all been frozen, but Income Tax Personal Allowances should now rise by inflation from April 2028.
- Capital Gains Tax rates have increased to 18% and 24% for disposals made on or after October 30, an immediate rise. Business Asset Disposal Relief remains at 10% for the current year but will increase to 14% and then 18% from April 5, 2025 and April 5, 2026 respectively.
- Independent schools have been hit hard with VAT on fees being introduced with effect from January 1, 2025, and the news that they will no longer be eligible for charity exemption from Business Rates (in England).
- In England, a 2% increase in Stamp Duty Land Tax was announced for the purchase of second homes, taking the surcharge from 3% to 5% in the hope that it helps gives an advantage to first-time buyers over landlords and businesses buying residential property.
- There were some minor changes to company car tax, all expected, however buried in the detail was the news that double cab pick-ups, which have historically enjoyed generous tax reliefs, would be treated as cars from April 2025 for Corporation Tax and Income Tax purposes. This will affect both Capital Allowances at the time of purchase and then the Benefit in Kind rules – a ‘double whammy’ for businesses.
- There were changes to Inheritance Tax with change to Agricultural and Business Property Relief, restricting the existing 100% reliefs to 100% on the first £1 million and then 50% relief thereafter as a combined claim.
“In other news, you might save 1p on a pint of draught beer and fuel duties remain frozen – but for the most part, the devil is in the detail this time around,”
