Understanding Budget 2024: Highlights from Rachel Reeves’ Address
As we look ahead to Budget 2024, Rachel Reeves’ recent speech illuminated several pivotal changes that are set to impact both businesses and individual taxpayers. Here’s a comprehensive breakdown of the core points.
Business Taxation Changes
In a significant shift for companies, the threshold for paying National Insurance on employee earnings will be adjusted. Effective April, firm will now incur National Insurance charges on earnings exceeding £5,000, compared to the current threshold of £9,100. This adjustment will be accompanied by an increase in the National Insurance rate from 13.8% to 15%.
To ease this burden, the Employment Allowance, which allows businesses to decrease their National Insurance contributions, will rise from £5,000 to £10,500.
Moreover, the main rate of corporation tax—which applies to businesses with taxable profits exceeding £250,000—will remain steady at 25% until the next election. The Business Asset Disposal Relief will continue, with an incremental change to Capital Gains Tax (CGT) postponed; rates are projected to increase to 14% in April 2025 and 18% in 2026-27.
Personal Taxation Updates
For individual taxpayers, the freeze on income tax and National Insurance thresholds will remain in effect until 2028, ensuring that rising wages won’t unintentionally push taxpayers into higher tax brackets.
Additionally, there’s set to be an increase in the Capital Gains Tax on profits from share sales, climbing from a maximum of 20% to up to 24%. However, rates for gains from the sale of additional properties will remain unchanged.
Lastly, the freeze on inheritance tax thresholds has been extended, pushing it beyond 2028 and now targeting 2030 for a review.
These measures collectively aim to shape the financial landscape for both businesses and individuals as we navigate the coming years under Budget 2024. Stakeholders are encouraged to stay informed and prepare for these changes as they unfold.
