National Insurance
On an employer level (class 1 NIs) the rate will increase from 13.8% to 15% from 6th April 2025. This will apply on employee earnings above £5,000 (rather than £9,100 at present) with this level frozen until 6th April 2028.
Employers with an NI bill of less than £100,000 can get £5,000 relief from the charge. From 6th April 2025 this will be replaced by a flat £10,500 allowance for all businesses.
In practical terms this means a company will not pay class 1 NIs where the total remuneration bill is £75,000 or less.
Class 2 and Class 3 NI rates will also see changes from 6th April 2025. The Lower Earnings Limit (LEL) and Small Profits Threshold (SPT) which underpin these rates will increase by 1.7% from 6th April 2025.
Capital Gains Tax (CGT)
The rate of CGT will align with the rates currently applied to property. Effective immediately (and so on transactions from 30th October), the rates will be:
- 18% for gains within the basic rate tax band (up from 10% currently)
- 24% for gains above the basic rate tax band (up from 20% currently)
There is to be no change to the annual exemption of £3,000.
Pensions
Pension funds will become subject to Inheritance Tax (IHT) from 6th April 2027. This will mean that funds left in a defined contribution pension on death will form part of the estate for IHT purposes.
For deaths after the age of 75, the income tax charge will continue to apply so funds being inherited in this way will potentially be subject to IHT, first, and income tax when accessed thereafter.
These changes do not affect Defined Benefit (DB) / Final Salary pensions in terms of the spouse/dependent pension provided on death. Lump sums paid out would potentially be subject to IHT, as would lump sums paid as part of a death-in-service plan.
Inheritance Tax (IHT)
The thresholds, allowances and tax rates are all unchanged. This means the Nil Rate Band (NRB) remains at £325,000 and the Residential Nil Rate Band (RNRB) at £175,000 unless tapering applies.
Business Relief (BR) and Agricultural Property Relief are being reformed with only the first £1 million being eligible (from 6th April 2026) for full IHT relief. Amounts above £1 million are only relievable at 50% (which gives an effective IHT rate of 20% on these assets).
Shares in Alternative Investment Market (AIM) companies only receive IHT relief on 50% of the amount held (again from 6th April 2026).
Pensions, as mentioned above, are brought into IHT from 6th April 2027.
Tax and Saving Allowance
All tax and saving allowances will remain frozen until 5th April 2030. This means no changes to:
- Personal allowance
- Personal savings allowance
- Starter rate for savings allowance
- Dividend allowance
- CGT exemption
- ISA allowance
- LISA allowance
- JISA allowance
The British ISA will be scrapped.
General
The additional dwellings surcharge on Stamp Duty Land Tax (SDLT) will rise from 3% to 5% from 31st October 2024.
Minimum wage increase from £11.44 to £12.21 from 6th April 2025, and an increase from £8.60 to £10.00 for 18-20 as part of a plan to phase this rate with the main rate.
