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Autumn Statement – What does it mean for your money?

Home | Autumn Statement – What does it mean for your money?

Following the Chancellor’s Autumn Budget announcement yesterday, we wanted to provide you with a summary of the changes and offer reassurance. While some updates were introduced, this was, overall, a more generous budget than expected.
Our team has closely reviewed the details, and we’re here to guide you through any adjustments to your investment strategy to keep it aligned with your goals.

There was considerable speculation before the statement, particularly around pensions and changes to Tax-Free Cash (TFC). Fortunately, there were no adjustments to pension TFC, which we know is a relief for many of you.
One key area, Inheritance Tax changes affecting pensions, will not take effect until 2027, giving us ample time to discuss any necessary adjustments and ensure your investments remain well-positioned.

Below, we’ve highlighted the main measures announced in Labour’s Autumn Budget and analyzed their potential impacts on personal finances and investments. Piers Mepsted, our Managing Director, also shares insights on what these changes could mean for the UK economy and growth outlook.

Please feel free to reach out with any questions or concerns—we’re here to help.

Key Highlights 

CAPITAL GAINS TAX (CGT)
Announcement

  • From 30 October 2024 CGT rates will increase to 18 percent for lower rate taxpayers and 24 percent for higher rate taxpayers.
  • The CGT rates for residential property will remain at 18 percent for lower rate taxpayers and 24 percent for higher rate taxpayers.

Impact

  • The main rates of CGT are currently charged at a lower rate of 10 percent and a higher rate of 20 percent.
  • Changes will increase the tax payable on disposals, equalising the tax rates for residential property and non-residential property. 

INHERITANCE TAX (IHT)
Announcement

  • Pensions are to become subject to inheritance tax from 2027.
  • The freeze to the IHT threshold of £325,000 per person has been extended from April 2028 to April 2030.

Impact

  • Currently pensions largely sit outside of your estate for inheritance tax purposes. This allows you to pass your pension on to future generations without being subject to a 40 percent tax charge. The change will mean individuals will no longer see pensions as part of their estate planning strategy. It’s not clear how this will interact with income tax, particularly for those who die before 75, where currently the pension scheme would be inherited free of inheritance tax and income tax. 
  • More individuals’ estates will be pushed over the taxable threshold due to inflation and growth on asset values. The IHT threshold has now been frozen at £325,000 for 15 years. Were it linked to Retail Price Index inflation, it would now stand at £599,181.

ISAs
Announcement

  • The government will not proceed with the British ISA due to mixed responses to the consultation launched in March 2024.
  • Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2030.

Impact

  • The freezing of ISA allowances will reduce the benefit of ISAs in financial planning over time.

INCOME TAX BANDS REMAIN FROZEN
Announcement

  • The income tax bands will remain frozen until April 2028. They will then increase in line with inflation as part of Labour’s pledge to protect working people.
  • Income tax rates will remain as they are now.

Impact

  • Income tax thresholds have been frozen since 2021 and keeping them so until April 2028 will cause more people to be pushed into paying higher income tax rates as a result of inflation, known as fiscal drag.

VAT ON PRIVATE SCHOOL FEES
Announcement

  • 20 percent VAT to apply to private school fees with effect from 1 January 2025.

Impact

  • Day pupils will see an increase of £2,130 per annum and boarders an increase of £7,100 per annum (based on the Independent Schools Council’s 2023 national average across all age groups). 

BUSINESS ASSET DISPOSAL RELIEF (BADR) & INVESTORS RELIEF (IR)
Announcement

  • Rates for BADR and IR (both currently at 10 percent) will rise to 14 percent from April 2025, and to 18 percent from April 2026.
  • From 30 October 2024, the lifetime limit for investors relief will reduce from £10 million to £1 million. The £1 million limit for BADR will remain the same.

Impact

  • Individuals looking to sell their businesses or qualifying investors who would benefit from these reliefs will face a tax rise of £40,000 for a sale made from April 2025, and £80,000 for a sale made from April 2026 (assuming a gain of £1 million on sale).
  • Those with lifetime gains above £1 million who would benefit from IR will see the standard rates of CGT now apply to the excess.

ENTERPRISE INVESTMENT SCHEME (EIS) & VENTURE CAPITAL TRUSTS (VCT)
Announcement

  • Both the EIS and VCT schemes will be extended to at least 2035.

Impact

  • Giving these schemes the greenlight for another 10 years provides reassurance to both start-ups looking to raise external funds, as well as investors who benefit from the schemes and the generous tax reliefs available.

REFORM TO BUSINESS RELIEF (BR) & AGRICULTURAL PROPERTY RELIEF (APR)
Announcement

  • From April 2026, the current full relief from IHT will only apply to the first £1 million per individual of combined BR- or APR-qualifying assets, with a 50 percent rate of relief (an effective tax rate of 20 percent) applying thereafter.
  • From April 2026, investments not listed on markets of recognised stock exchanges, including AIM, will no longer benefit from full relief with the 50 percent rate applying to the entire sum.
  • The government announced they will publish a technical consultation in early 2025 on how this will impact trusts holding APR or BR assets. It has been indicated there will be a £1 million allowance available to trustees.

Impact

  • Those with significant business assets, working farms, or qualifying AIM shares, may for the first time face an IHT liability on those assets. For a business owner with a shareholding of £10 million, the IHT liability could increase from zero under current rules, to £1.8 million from April 2026.

STAMP DUTY LAND TAX (SDLT)
Announcement

  • The higher rates for additional dwellings (covering second homes, buy-to-let residential properties, and businesses purchasing residential property) will increase from three percent to five percent from 31 October 2024.
  • The single rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 by corporates will also be increased by two percent, from 15 percent to 17 percent.
  • Welsh land tax rates and stamp duty on second homes are devolved.

Impact

  • This change is designed to improve the prospects of first-time buyers when competing with property investors.
  • Those who exchanged contracts prior to 31 October 2024 are not affected by this rate increase.

INCREASE TO EMPLOYERS’ NATIONAL INSURANCE (NI)
Announcement

  • Class 1 employers National Insurance contributions (NICs) will be increased from 13.8 percent to 15 percent from 6 April 2025.
  • The employment allowance was increased from £5,000 to £10,500.

Impact

  • NICs are paid by employees, employers and the self-employed on earnings. Currently, employers pay NI at 13.8 percent on earnings over £9,100. Today’s announcement will see the headline rate of 13.8 percent increased to 15 percent and employers will start to pay NICs on earnings over £5,000.
  • The change in minimum threshold will cost employers £615 for employees earning over £9,100 per annum. The 1.2 percent increase will affect all employers with employees earning over £9,100.
  • In an effort to soften the impact on employers, the employment allowance increase means 865,000 businesses will not pay any NI at all next year, with another one million paying the same or less as they did previously.

INCREASE TO THE NATIONAL MINIMUM WAGE 
Announcement

  • From April 2025, the minimum wage is set to increase 6.7 percent to £12.21 per hour for those aged over 21.
  • 18- to 20-year-olds will have an increase of 16.3 percent increase to £10 per hour.
  • Under 18s and apprentices will have an increase to £7.55 per hour from £6.40.

Impact

To cover higher wage costs, businesses may need to pass on these increased costs to the consumer through charging higher prices for their products or services, particularly when taken together with increased employers’ National Insurance.

Ultimately, business owners are going to need to pay more for their staff. This may lead to them reducing their workforce, not taking on additional staff, or indeed not being able to pay their current obligations or any pay increases.

In summary

Today’s budget saw a lot of change but there will be some relief about the overall economic impact, especially as the Chancellor vowed to raise over £40 billion through tax increases. Despite this, this was technically a generous budget as the government spent more than they plan to raise in new taxes. As a result, taxes are forecast to rise to their highest share of GDP on record by 2026.The government’s focus on protecting “working people” from direct tax impacts will lead to a limited impact on households. However, businesses will bear the biggest burden through an increase in their NI contributions. The Office of Budget Responsibility (OBR) estimate that three quarters of the impact will ultimately be passed on to employees through lower effective wage growth, with the remaining quarter being reflected in lower profit.

The budget’s impact on markets was relatively modest. Small companies on the Alternative Investment Market (AIM) performed well, as the changes to tax breaks were less severe than anticipated. UK borrowing costs also increased only moderately, and the pound strengthened. Looking ahead, the OBR expects positive UK growth over the next two years, albeit at a slightly slower pace in the following years.

Looking ahead

While this list of measures is not exhaustive, we have highlighted what we consider the main points impacting personal finances and investments. For more detail, please feel free to contact us and we will be pleased to run through how this impacts you personally.