In a short video update, which can be watched below, I sat down with Nathan Valbonesi, Investment and Wealth Advice, Associate Director. We looked at the positive aspects, such as items which remain unchanged, as well as new helpful measures. In contrast, there are plenty of pain points for both our clients and the wider public, courtesy of new tax raising measures.
The positives: what remains unchanged
- Seven-year rule for Inheritance Tax remains unchanged, with no major reforms introduced
- Gifts out of income are still permitted
- Capital Gains Tax continues to be zeroed upon death
- Key trust structures such as the offshore bonds, discounted gift trusts and loan trusts remain intact
- Tax-free pension lump sum remains
- Headline ISA allowance stays at £20,000
- No new wealth taxes, exit taxes or National Insurance contributions on LLP profits.
The positives: new helpful measures
- £1 million allowance for Business Property Relief and Agricultural Property Relief will now be transferable
- The non-domicile charge has been limited on trusts, providing greater flexibility for estate planning
- Additionally, the loan charge is under review, and a new settlement offer has been introduced.
The challenges: new tax raising measures
- Thresholds will remain frozen until 2031
- 2% additional tax rate will apply to dividends from 2026 and to interest and property income from 2027
- From 2029, limits will be introduced on National Insurance deductions for salary sacrifice pension contributions
- A new ‘mansion tax’ will come into effect in 2028 for properties valued at £2 million or more
- Capital Gains Tax relief on disposals to employee share ownership trusts will be halved.
Timeline of Budget 2024 and 2025 measures taking effect
30th October 2024
- Capital gains tax (CGT) up to 18/24% for basic/higher rate taxpayers
- Stamp duty land tax (SDLT) surcharge up 2%
6th April 2025
- Employers’ NIC raised to 15%
- NIC threshold down to £5,000
6th April 2026
- Dividend tax up 2% for basic and higher rate taxpayers
- Business & agricultural relief restrictions for IHT
- CGT rate for Business Asset Disposal Relief increased to 18%
- Income tax relief on VCT investments reduced to 20% (from 30%)
6th April 2027
- Tax on savings and rental income up 2% for all tax bands
- IHT on unused pension pots starts
- Cash ISAs restricted to £12k for under 65s
6th April 2028
- Mansion tax starts at £2.500 p.a. for £2m+ homes
- Electric Vehicle Exise Duty (eVED) takes effect at 3p per mile for electric vehicles, 1.5p per mile for plug in hybrids
6th April 2029
- NIC exemption for pension salary sacrifice restricted to £2k
2030-31
- Income Tax allowances and rate bands and NIC thresholds still frozen
Start a conversation with us
We’re always available and happy to discuss the potential impact and planning opportunities situations like this may present. Please get in touch with your private banking team to review your individual circumstances.
Clare Munro is our Senior Tax Adviser. Within her day-to-day role, she provides tax advice to high-net-worth clients in relation to their banking and wealth management needs. With a particular interest in inheritance tax and capital gains tax planning, Clare helps clients to structure their wealth tax efficiently to preserve it through family generations.
What you need to know
Tax laws may change and taxation will vary depending on your own personal circumstances.