Capital Gains Tax: Higher Rates for Investors
One of the most significant changes affects anyone selling investments or second properties:
New CGT Rates (from October 30, 2024)
- Basic rate taxpayers: 18% (up from 10%)
- Higher/additional rate taxpayers: 24% (up from 20%)
- Residential property: Remains at 18%/24% (unchanged)
Example Impact
If you're a higher-rate taxpayer selling shares with a £50,000 gain:
- Old rate (20%): £10,000 tax
- New rate (24%): £12,000 tax
- Extra cost: £2,000
What this means for you: If you're planning to sell investments, consider your timing carefully. The annual CGT allowance remains at £3,000, so use it wisely.
National Insurance: Employers Pay More
While employee National Insurance rates remain unchanged, employer contributions are increasing:
- Rate increase: From 13.8% to 15% (from April 2025)
- Threshold lowered: From £9,100 to £5,000 per year
- Small business relief: Employment Allowance increased from £5,000 to £10,500
Impact: While this doesn't directly affect your payslip, it may influence salary negotiations and bonuses as employers face higher costs.
Pensions: Changes for High Earners
Inheritance Tax on Pensions
From April 2027, unused pension pots will be included in your estate for inheritance tax purposes. This reverses decades of pension being IHT-free.
- Current rule: Pensions pass IHT-free to beneficiaries
- New rule (2027): Pensions count toward the £325,000 IHT threshold
- Rate: 40% on amounts above the threshold
Pension Tax Relief Protected
Despite speculation, the Chancellor confirmed that pension tax relief will remain at your marginal rate—good news for higher earners.
Stamp Duty: First-Time Buyer Relief Extended
The temporary increase in stamp duty thresholds for first-time buyers has been extended until March 2025:
- First-time buyers: No stamp duty on first £425,000 (was due to revert to £300,000)
- All other buyers: Threshold remains at £250,000
Note: This is only a temporary extension. The thresholds are still scheduled to fall in April 2025 unless further extended.
ISA Allowances: No Changes
Good news for savers—ISA allowances remain unchanged:
- Annual ISA allowance: £20,000
- Junior ISA: £9,000
- Lifetime ISA: £4,000 (within the £20,000 total)
Income Tax: Frozen Thresholds Extended
The freeze on income tax thresholds continues until 2028:
- Personal Allowance: £12,570 (frozen since 2021)
- Higher rate threshold: £50,270 (frozen since 2021)
- Additional rate threshold: £125,140
Fiscal drag impact: As wages rise with inflation, more people are pushed into higher tax bands without any increase in real income. This "stealth tax" is expected to raise billions.
Fiscal Drag Example
If your salary increases from £48,000 to £52,000:
- You cross into the 40% tax bracket
- The extra £1,730 above £50,270 is taxed at 40% instead of 20%
- You pay an extra £346 in tax compared to if thresholds had risen with inflation
Business and Self-Employed Changes
Business Asset Disposal Relief
The rate of CGT on business asset disposals (formerly Entrepreneurs' Relief) is increasing:
- From April 2025: 14% (up from 10%)
- From April 2026: 18%
Carried Interest
Private equity and fund managers will see carried interest taxed at higher rates from April 2025, aligning more closely with income tax.
What Should You Do?
For Investors
- Review your investment portfolio and consider tax-efficient wrappers (ISAs, pensions)
- Use your £3,000 CGT allowance each year
- Consider spreading large disposals across tax years
For Pension Savers
- Continue maximizing pension contributions—tax relief remains valuable
- If you're older, consider IHT planning for large pension pots
- Review beneficiary nominations on your pension
For First-Time Buyers
- Take advantage of stamp duty relief before March 2025
- Be prepared for potentially higher costs from April 2025
- Consider Lifetime ISAs for the 25% government bonus
For High Earners
- Be aware of fiscal drag pulling you into higher tax bands
- Maximize pension contributions to reduce taxable income
- Consider salary sacrifice arrangements
The Bigger Picture
This Budget aimed to raise £40 billion through tax increases and spending cuts, primarily to fund public services and reduce borrowing. The key themes were:
- Wealth taxes: Higher CGT and IHT on pensions target those with assets
- Business costs: Employer NI increases shift burden to companies
- Frozen thresholds: Fiscal drag continues to raise revenue quietly
- Public services: Increased funding for NHS and education
Looking Ahead
Key dates to remember:
- March 2025: First-time buyer stamp duty relief ends
- April 2025: Employer NI increases take effect
- April 2025: Business CGT rates rise to 14%
- April 2026: Business CGT rates rise again to 18%
- April 2027: Pensions become subject to IHT
- April 2028: Income tax thresholds may finally be unfrozen
The Bottom Line
The Autumn Budget 2024 represents a significant shift in UK tax policy, with investors and businesses bearing the brunt of tax increases. While income tax rates remain unchanged, frozen thresholds mean most workers will pay more tax in real terms.
The key is to plan ahead: use tax-efficient accounts, maximize allowances, and consider the timing of major financial decisions. As always, seek professional advice for your specific circumstances.
Use our Income Tax Calculator to see how these changes affect your take-home pay.