Autumn Budget 2024: Personal changes

In the Autumn Budget, delivered on 30 October, Chancellor Rachel Reeves increased the higher rate capital gains tax from 20% to 24% and the lower rate from 10% to 18% and closed the IHT loopholes, bringing inherited pensions into IHT from April 2027 and a pledge to reform agricultural property relief.

She also scrapped the non-dom regime from 2025, replacing it instead with a new residence-based scheme “with internationally competitive arrangements for those coming to the UK on a temporary basis”.

Unfrozen personal tax thresholds

Going against pre-Budget predictions, Reeves decided against extending the freeze on personal tax thresholds for a further two years, instead announcing that from 2028 to 2029 personal tax thresholds will be updated in line with inflation.

CGT, IHT and non-doms

One of the announcements that is likely to be of interest to accountants is the changes to capital gains tax and inheritance tax.

The Chancellor confirmed pre-Budget speculation by announcing an increase to capital gains tax as part of Reeves’ fiscal plans.

This means the lower rate of CGT will increase from 10% to 18% and the higher rate from 20% to 24% while the rates for residential property will be maintained at 18% and 24%.

She also announced that business asset disposal relief would remain at the current level this year. And as set out in Labour’s manifesto, Reeves explained that there “needs to be a fairer approach to the way that carried interest is taxed”, introducing an increase to capital gains rates on carried interest to 32% from April 2025. Then from April 2026, Labour plans to deliver further reforms “to ensure that the specific rules for carried interest are simpler, fairer and better targeted”.

She then turned her attention to inheritance tax. She confirmed that she will continue the inheritance tax freeze until 2030. “I will extend that freeze for a further two years until 2030 that means the first “325,000 pounds of any estate can be inherited tax free, rising to “500,000 if the estate includes a residence passed to direct descendants, and £1m when a tax free allowance is passed to a surviving spouse or civil partner.”

She also announced that the government will close the loophole created by the previous government made even bigger when the lifetime allowance was abolished by bringing inherited pensions into inheritance tax from April 2025.

Reeves also announced the scrappage of the “outdated concept” of domicile from the tax system from April 2025.