Key Takeaways from the 2024 Autumn Budget

Chancellor of the Exchequer Rachel Reeves delivered the 2024 Autumn Budget earlier today.

Our panel of specialists have reviewed the key measures in the announcement and provided their views on what the changes could mean for individuals and businesses.

If you’d like to discuss what today’s announcements might mean for you, or your business, please don’t hesitate to get in touch with any of the spokespeople directly, or your usual A&M contact. 

Read the key takeaways here

See the latest commentary from our team of tax experts on the UK Autumn Budget 2024 below:

Kersten Muller on the Autumn Budget for the Property Industry:
The property industry is probably a net beneficiary from the Autumn Budget. This, coupled with the expectation of lower interest rates to come, will be good news for the sector that has experienced significant turbulence over the last 18-24 months.

Kersten Muller on Planning Funding:
Additional funding promised for the planning system is welcome. This will be needed to accelerate the building of new homes although it needs to be coupled with reform.

Louise Jenkins on National Insurance:
While changes to National Insurance were perhaps not as bad as feared, when combined with increases to the National Living Wage, it represents a significant burden for businesses, particularly SMEs.

The combined cost of the employer national insurance changes for a business with 50 employees will be around £43,000, and for a business with 200 employees will be just over £173,000. The impact is slightly offset by the increase in the Employers Allowance, which most employers regardless of their size will now be able claim. Government figures suggest that 865,000 businesses will pay no employers NIC next year as a result of the changes announced today.

Faced with difficult choices, some employers may need to consider cost saving measures such as raising prices, which could contribute to inflation, or reducing their wage bills through cuts to jobs or hours.

Steve Smith on the Corporation Tax Roadmap:
Today’s Corporation Tax Roadmap includes a commitment to maintain stability in the current Capital Allowances regime. As well as an intent to consolidate and simplify the Capital Allowances Act 2001, comes a planned consultation on pre-development costs which is welcomed following the recent Gunfleet Sands ruling and potential impact of uncertainty on investment in renewable energy and major infrastructure projects.

Mairéad Warren de Búrca on Electric Vehicles:
The focus on encouraging electric vehicle adoption brings welcome incentives, with these steps offering clear financial benefits to support the shift to greener transport. However, the decision to keep fuel duty steady—while a relief for motorists and businesses—somewhat tempers this momentum. Reversing the 5p cut and letting fuel duty rise with inflation could have generated an estimated £3 billion and encouraged more drivers to consider electric options.

It’s also surprising the government missed an easy win by not lowering the VAT on EV charging from 20% to 5%, a move that would have supported the push for a stronger charging infrastructure. Balancing immediate relief with sustainable transport goals will be key as these policies take shape.

Rhys Owen on Inbound Investment into the UK:
Significant increase in national minimum wage and large increase in Employers’ NIC will reduce profitability, making UK companies less attractive for inbound investment.

Victoria Price on Employer's National Insurance: 
Whilst some of the tinkering has been a distraction, the changes to employer's national insurance has been the Trojan Horse. Employers will bear the burden of closing more than half of the tax gap. The Chancellor herself alluded to the knock on consequences of this which will include further pressure on the affordability of employees particularly when coupled with generous increases in the living wage.

Kathie Haunton on R&D Tax:
The R&D tax regimes have been a key source of funding for many companies in the tech sector for the last 24 years. In recent years HMRC have been criticised by the NAO for their management of the R&D regimes and the levels of abuse of the R&D regimes. In response HMRC have increased scrutiny and mandated that companies provide details of the R&D projects being claimed in the Additional Information Form in August 2023. In October 2023 a R&D compliance guidance was published detailing the level of information HMRC expect companies to collect. This has increased the compliance burden on claimant companies at time when many smaller companies will experience a reduction in the value of the benefit they receive or simply lose their entitlement to claim due to the move to the new merged R&D.

HMRC have also taken cases to First Tax Tribunal with some notable wins and losses. These cases provide some insight into how HMRC may interpret the contracted-out rules in the new merged regime and confirmed the importance of properly evidencing R&D claims. These changes have had an impact with the latest HMRC statistics a showing reduction in the number of claims being submitted. More recently there has been action to address the behaviour of the less reputable R&D tax providers.  

Given the above activities it is to be welcomed that the Budget has not brought any further changes to rates and the operation of the new merged R&D regime. The announcement of a consultation on the use of advance clearances for R&D claims with stakeholders and further information on the scale and characteristics of error and fraud show that HMRC are continuing to focus on improving the management of the R&D tax credit regimes.

Victoria Price on Capital Gains Tax:
The Chancellor's bark has been worse than her bite as we have seen months of speculation about CGT rising as high as 39% end with a relatively modest 4% increase to 24%.

Mairéad Warren de Búrca on Private Schools:
It’s disappointing that the government didn’t defer these changes to the start of the 2025 school year, allowing private schools a smoother transition. Setting aside the politics, the decision to introduce VAT for private schools feels rushed, with limited consultation or consideration of the sector’s unique challenges.

Wealthier schools may be able to absorb the impact and even gain some advantage as a result of historical capital expenditure. However, less well-funded schools are likely to face significant administrative hurdles. HMRC resources to support schools with these new rules are limited which means that webinars and training from HMRC has not been of its usual high standards.

Erin Brookes on Retailers:
Today’s Budget is a tale of two halves for retailers. Business rates relief will avoid the cliff-edge that many retailers feared next year, while the maintenance of R&D tax relief will help encourage investment in new technology and products. The increase in the National Living Wage (NLW) may offer a welcome boost to consumer confidence, which has been notably low, with many individuals concerned about their personal finances.

However, this comes as a double-edged sword for retailers. While it's positive to uplift lower-paid employees—many of whom make up the three million employed in the sector, including younger and part-time workers—the associated rise in operating costs could lead to a challenging adjustment period. This, coupled with the increase in employer national insurance, means that retailers may face difficult decisions as they seek to balance supporting their front-line teams with the need to invest in productivity-enhancing areas like technology. To manage these added costs, we could see businesses prioritising cost efficiencies elsewhere to stay resilient against this headwind.

Kersten Muller on Housing:
Much more significant than capital gains and stamp duty reforms were the announcements on housing. A boost to housing one of the Labour government’s key aims, and the Budget measures appear to have been well-received if the share prices of house builders are anything to go by.

The measures announced are certainly wide-ranging. The headline of investing £5bn to deliver the housing plan is only part of it.

A key part will be to increase the supply of affordable homes, which is to be achieved by a reduction in the Right to Buy discount; crucially Local Authorities will be able to retain the proceeds from sales under Right to Buy and decide how to spend them. Another element is a £1bn boost to remediate homes impacted by unsafe cladding.

Rhys Owen on Carried Interest:
Although the increase of the carried interest tax rate to 32% from April 2025 is not as bad as the private equity industry had feared, the announcement of reforms to the carried interest regime from April 2026 to make it ‘better, fairer and simpler’ risks adding additional uncertainty to firms considering investment in the UK. 

Anthony Whatling on the “non-dom” tax regime:
The Chancellor has confirmed the end of the “non-dom” tax regime, as we expected, from April 2025. It is promising to hear that there are some concessions, with the extension to the temporary repatriation facility, which will allow non-doms to bring their historic income and gains to the UK at a reduced rate of tax. We will need to see the detail to see whether this will be enough to satisfy those non-doms who had been considering leaving the UK ahead of the new rules coming into force.

Jason Clatworthy on Capital Gains Tax and Carry Taxation:
The increase in rates of capital gains and carry taxation to levels substantially below the highest rates of income tax rates should be seen as the Funds Management industry, Investors and Entrepreneurs alike as good news and provided no more material changes proposed in the short term should help in providing certainty for the sector and hopefully mitigate the flight of talent to leave the UK.

Kersten Muller on Business Rates:
Changes to the Business Rate relief for the retail, hospitality and leisure sector will be retained, although lowered from 75% to 40%. This means businesses in the sector will still face a significant increase in their rates bill from April 2025 but nowhere near the £3bn cliff edge that had been expected.

Victoria Price on Income Tax:
The big thaw - Rachel Reeves seeks to warm the cockles of working people by increasing the thresholds for income tax in line with inflation from 2028 onwards. In practice this means she will benefit from the fiscal drag for a further 3 tax years thanks to the Conservative government's earlier policy.

Kersten Muller on Capital Gains Tax:
An increase in Capital Gains Tax was widely expected. The announcement of an effective alignment of CGT rates at 18% (lower) and 24% (higher) for all assets was probably less than expected, this will be a relief to investors who will also welcome the simplification. Whilst investors in residential property will not face an increase in CGT, the SDLT surcharge on residential investment properties will increase from 2% to 5% tomorrow.

Kersten Muller on Stamp Duty Land Tax:
The increase of surcharge from 2% to 5% on second homes and investment properties was not surprising and is aimed at supporting first time buyers entering the market.

Victoria Price on Carried Interest: 
Ms. Reeves sticks to her guns on carried interest increasing the rate to 32% but falling short of an alignment to income tax. However, she has left the door wide open for further reform and needs to be careful that the continued uncertainty doesn't drive more funds and executives away from the UK.

The Chancellor does appear to have taken on board the need to consult and has fallen short of going the whole hog with carried interest. Reading between the lines in relation to carried interest the government look set to introduce a tighter alignment between capital at risk and tax treatment.  

Victoria Price on Private Jet Duty: 
The Chancellor has hit high fliers where it hurts with the introduction of an additional 50% duty on private jets.

Victoria Price on Business Asset Disposal Relief: 
Business Asset Disposal Relief lives to see another day with the Chancellor refraining from abolishing the allowance. Instead she has adopted gradual erosion of the reduced tax rate seeing it move from 10% to 18% over the next three years.

Victoria Price on Inheritance Tax: 
Today the Chancellor has dropped a bombshell on family businesses. Restricting business relief to a maximum of £1m could have dire consequences for some of the UK's most historic companies potentially making it difficult for them to remain in family ownership.

Pensions being included will be a disincentive to savers and feel like a blow for hardworking people who have done the right thing to provide for their retirements, but it is a clever move by the Chancellor as it won't impact the core voter group.

Victoria Price on Employer's National Insurance: 
Rachel Reeves splits hairs in relation to employer's national insurance with both and increase to the rate and a lowering of the threshold bringing £25bn into the public purse. Small businesses look set to be insulated with a higher exemption from NIC which will be a change welcomed by SMEs.

Victoria Price on Fuel Duty: 
The Chancellor has frozen fuel duty in the name of cost to the public alongside upholding her promise in relation to income tax, VAT and national insurance for individuals.

Louise Jenkins on the National Living Wage: 
The increase in the National Living Wage is a positive step toward supporting lower-income workers; however, its impact will be strongly felt in sectors like hospitality, where an estimated 3.5 million people in the UK are employed. This industry, still recovering from the pandemic, relies heavily on small businesses—98% of private sector businesses in the UK have fewer than 49 employees.

For many hospitality employers, absorbing these additional wage costs may prove challenging, as a significant proportion of their workforce earns the National Minimum Wage or National Living Wage. An 18-20 year working a 40 hour week earning the NMW will see an increase in their take home pay of around £40 a month. Faced with difficult choices, these employers may need to consider raising prices, which could contribute to inflation, or reducing their wage bills through cuts to jobs or hours. This shift underscores the need for balanced support to ensure that both employees and businesses can thrive in the current economic environment.

Erin Brookes on the National Living Wage: 
The increase in the National Living Wage (NLW) may offer a welcome boost to consumer confidence, which has been notably low, with many individuals concerned about their personal finances. For retailers, however, this comes as a double-edged sword. While it's positive to uplift lower-paid employees—many of whom make up the three million employed in the sector, including younger and part-time workers—the associated rise in operating costs could lead to a challenging adjustment period.

Retailers may face difficult decisions as they seek to balance supporting their front-line teams with the need to invest in productivity-enhancing areas like technology. To manage these added costs, we could see businesses prioritising cost efficiencies elsewhere to stay resilient against this headwind.