Budget 2024: Essential Changes for UK Businesses and Investors

The Autumn Budget 2024 introduces over £40 billion in new taxes, marking a significant shift in the UK’s economic approach. Here’s a breakdown of the key changes that businesses and investors need to consider.

1. Non-Dom Rule Abolished

Starting in April 2025, non-domiciled individuals will lose their tax privileges, which will make the UK less attractive for foreign investors. As a result, this change may prompt non-doms to reevaluate their financial plans to manage new tax liabilities.

2. Carried Interest Tax Increase

Starting in April 2025, the carried interest tax rate will increase to 32%. Consequently, this rise will affect private equity and venture capital gains directly, potentially shifting investors’ focus toward tax-friendlier markets outside the UK.

3. Capital Gains Tax (CGT) Increase

From April 2025, CGT rates will increase, with the lower rate rising from 10% to 18% and the higher rate going from 20% to 24%. Therefore, individuals and businesses may need to reassess their asset disposal strategies, as gains will now face greater taxation.

4. Employers’ National Insurance Contributions (NIC) Raised

Starting from April 2025, employers’ NIC will increase to 15% and a requirement for payments to commence at a salary of £5,000, which will drive up payroll costs. Consequently, small and medium-sized enterprises may need to adjust their hiring and workforce budgeting to offset this additional expense.

5. VAT on Private School Fees

From January 2025, a 20% VAT will apply to private school fees, adding financial pressure on families choosing private education. As a result, this extra cost could lead to reduced demand, affecting private school enrolment.

6. Business Rates and Relief Adjustments

From 2026, the retail and hospitality sectors will experience reduced relief, with a new, lower permanent rate. Therefore, businesses in these sectors may need to adjust their pricing strategies to balance the increased operational costs.

7. Private Jet Duty Increase

Starting in 2025, the duty on private jet travel will rise by 50% per passenger. Consequently, this change will add substantial costs to private travel, which may prompt individuals and companies to consider alternative travel options.

8. Inheritance Tax Freeze Extended

Meanwhile, the inheritance tax threshold will remain frozen until 2030, meaning more estates will be taxed at unchanged levels despite inflation. As a result, families may need to review their estate plans to manage potential tax implications.