We also anticipated changes such as increases to Capital Gains Tax (CGT), abolition of the Non-UK Domicile tax rules, and putting VAT and business rates on private schools.

While some change to the IHT treatment of pension death benefits was expected, what wasn’t expected was that the government will almost entirely remove the IHT shelter from pension fund death benefits from 2027. This is subject to a consultation that will run for 12 weeks between 30 October 2024 and 22 January 2025, and will no doubt require a re-appraisal of IHT and tax planning strategies for some.

All in all, some of the more concerning changes being circulated in the press didn’t happen (for example, reductions in pension tax-free lump sum entitlements or a restoration of the pension Lifetime Allowance rules), but there are still a number of tax changes that will have significant implications for both advisers and clients.

This is a roundup of announcements that may be useful (or interesting). All information is lifted directly from Autumn Budget-related documents published by the government (relevant links below), including the government’s Autumn Budget 2024 ‘Red Book’.

Headlines

• Inheritance Tax (IHT) on pension death benefits from 2027 – Inherited pensions on death will become subject to IHT as standard, for the first time, from 6 April 2027.
• Inheritance Tax (IHT) threshold – Frozen for an additional two years until April 2030.
• Rise in employers NICs from April 2025 – Employers NICs will increase by 1.2% from 13.8% to 15%, and Secondary threshold when employers start paying NICs will drop from £9,100 to £5,000.
• Increases to Capital Gains Tax (CGT) – The lower and higher main rates of Capital Gains Tax will increase to 18% and 24% respectively for disposals made on or after 30 October 2024.
• Income tax and Employee NICs – No extension of the freeze in income tax and National Insurance thresholds beyond 2028-29.
• Increase in the National Living Wage and the National Minimum Wage – The National Living Wage will increase from £11.44 to £12.21 an hour from April 2025 and the National Minimum Wage for 18 to 20-year-olds will also rise will rise by £1.40 per hour from £8.60 to £10.00 an hour.
• ISA, Lifetime ISA, Junior ISA and Child Trust Fund Allowance – No changes to Annual subscription limits, which will remain at current levels until 5 April 2030.
• Non-UK domicile tax regime – Will be abolished and the concept of domicile will be removed from the tax system from April 2025.
• Stamp Duty – Stamp duty land surcharge for second homes increased by 2% to 5% from tomorrow (31 October 2024).

National Insurance and Personal tax

Rise in employers NICs from April 2025

Employers NICs will increase by 1.2% from 13.8% to 15%, and Secondary threshold when employers start paying NICs will drop from £9,100 to £5,000.

Personal income tax and National Insurance contributions thresholds

The government will not extend the freeze to income tax and National Insurance contributions thresholds. From April 2028, these personal tax thresholds will be uprated in line with inflation.

High Income Child Benefit Charge reform, simplification and targeting of economic support to households

The government will not proceed with the reform to base the HICBC on household incomes. This is because it would have come at a significant fiscal cost of £1.4 billion by 2029-30 if setting the threshold to £120,000-£160,000, where no families would lose out. To make it easier for all taxpayers to get their HICBC right, the government will allow employed individuals pay their HICBC through their tax code from 2025 and pre-prepopulate Self-Assessment tax returns with Child Benefit data for those not using this service. The government will also explore how better data use and sharing across government departments can improve the targeting of economic support to households, especially in times of crisis.

Capital Gains Tax

increasing Capital Gains Tax (CGT)

The government is raising revenue by increasing Capital Gains Tax (CGT), while ensuring that the UK tax system remains internationally competitive. CGT, which is paid on the increase in value of an asset when it is disposed of, is paid by fewer than 1% of adults each year. The main rates of CGT are currently charged at a lower rate of 10% and a higher rate of 20%, and these will be increased to 18% and 24% respectively from 30 October 2024. These new rates will match the residential property rates, which are not changing.

There are two reliefs which offer access to a lower rate of CGT: Business Asset Disposal Relief (BADR), and Investors’ Relief (IR). The rate for both BADR and IR will increase gradually, to give business owners time to adjust to the changes. The BADR and IR rates will rise to 14% from 6 April 2025, and will match the main lower rate of 18% from 6 April 2026. Phasing in the BADR and IR rate increases demonstrates the government’s commitment to a predictable tax system. The government is committed to creating a positive environment for entrepreneurship and will work with leading entrepreneurs and venture capital firms on how policy supports that, including the role of the existing tax schemes.

Inheritance Tax (IHT)

Inheritance tax thresholds

The current inheritance tax thresholds are due to be frozen until April 2028, and the government is extending these threshold freezes for a further two years to April 2030.

Inheritance tax: unused pension funds and death benefits

The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6 April 2027. This will restore the principle that pensions should not be a vehicle for the accumulation of capital sums for the purposes of inheritance, as was the case prior to the 2015 pensions reforms.

Agricultural property relief and business property relief

The government will reform agricultural property relief and business property relief from April 2026. In addition to existing nil-rate bands and exemptions, the 100% rate of relief will continue for the first £1 million of combined agricultural and business assets to help protect family farms and businesses and will be 50% thereafter. The government will also reduce the rate of business property relief to 50% in all circumstances for shares designated as “not listed” on the markets of a recognised stock exchange, such as AIM. This will affect around 0.3% of estates each year. The government is also removing the opportunity for individuals to use pensions as a vehicle for inheritance tax planning by bringing unspent pots into the scope of inheritance tax from April 2027, which will affect around 8% of estates each year.

Pensions and Pensions tax

Making unused pension funds and death benefits liable for Inheritance Tax

• From 6 April 2027, when a pension scheme member dies with unused funds or without having accessed all of their pension entitlements, those unused funds and death benefits will be treated as being part of that person’s estate and may be liable to Inheritance Tax. The current distinction in treatment between discretionary and non-discretionary schemes will be removed.
• The change will apply to both DC and DB schemes. It will apply equally to UK registered schemes and Qualifying Non-UK Pension Schemes (QNUPS). This will ensure that most pension benefits are treated consistently for Inheritance Tax purposes, regardless of whether the scheme is discretionary or non-discretionary, DC or DB. Any references to pension schemes in this consultation document should be taken as referring to UK registered pension schemes.
• A small number of specified pension benefits will remain outside scope for Inheritance Tax, including where funds can only be used to provide a dependants’ scheme pension. These are currently out of scope in non-discretionary schemes and so will remain out of scope under this change.
• This is subject to a consultation that will run for 12 weeks between 30 October 2024 and 22 January 2025.The consultation document outlines that ‘As part of these changes, pension scheme administrators (PSAs) will become liable for reporting and paying any Inheritance Tax due on unused pension funds and death benefits’. Part 2 of the consultation sets out the background to different types of pension schemes and summarises how discretionary and non-discretionary pensions are currently treated for Inheritance Tax purposes. It also sets out in detail how the new changes will operate in practice from 6 April 2027, including how any Inheritance Tax due on pensions will be calculated, reported and paid to HMRC, and how relevant information will be exchanged between PSAs, PRs, beneficiaries and HMRC. Here is a link to the consultation document.

UK resident pension scheme administrators

The government will require scheme administrators of registered pension schemes to be UK resident from 6 April 2026.

Reducing tax-free overseas transfers of tax relieved UK pensions

The government will remove the exclusion from the Overseas Transfer Charge for transfers to Qualifying Recognised Overseas Pension Schemes (QROPS) in the European Economic Area (EEA) or Gibraltar from 30 October 2024 to address the risk of individuals receiving double tax-free allowances.

Overseas Pension Schemes (OPS) and Recognised Overseas Pension Schemes (ROPS)

The Government also announced that from 6 April 2025, the conditions of Overseas Pension Schemes (OPS) and Recognised Overseas Pension Schemes (ROPS) established in the EEA will be brought in line with OPS and ROPS established in the rest of the world, so that:

• OPS established in the EEA will be required to be regulated by a regulator of pension schemes in that country.
• ROPS established in the EEA must be established in a country or territory with which the UK has a double taxation agreement providing for the exchange of information, or a Tax Information Exchange Agreement.
• From 6 April 2026, scheme administrators of registered pension schemes must be UK resident.
• The removal of the exclusion for transfers to QROPS established in the EEA and Gibraltar from the OTC will have effect from 30 October 2024.
• The changes in the requirements for OPS and ROPS established in the EEA will have effect from 6 April 2025.
• The requirement for registered pension schemes to have a UK resident scheme administrator will be from 6 April 2026.

Basic State Pension and triple lock

The government will maintain the State Pension Triple Lock for the duration of this Parliament. The basic and new State Pension will increase by 4.1% in 2025-26, in line with earnings growth, meaning over 12 million pensioners will receive up to £470 per year. Working age benefits will be uprated in full in 2025-26 by the September 2024 Consumer Price Index (CPI) inflation rate of 1.7%.

The Pension Credit Standard Minimum Guarantee will also increase by 4.1% from April 2025, meaning an annual increase of £465 in 2025-26 in the single pensioner guarantee and £710 in the couple guarantee.

Mineworkers’ Pension Scheme

The government will transfer the Investment Reserve Fund in the Mineworkers’ Pension Scheme to the scheme’s Trustees. This will be paid out as an additional pension to members of the scheme. The government will also take forward a review of the existing surplus sharing arrangements.

Savings

Individual Savings Account (ISA) annual subscription limit

No change - The adult ISA annual subscription limit will be maintained at £20,000 until 5 April 2030.

Junior ISA and Child Trust Fund annual subscription limit

No change - The annual subscription limit for Junior ISAs and Child Trust Funds will be maintained at £9,000 until 5 April 2030.

Freeze the Starting Rate for Savings

The Starting Rate for Savings will be retained at £5,000 for 2025-26, allowing individuals with less than £17,570 in employment or pensions income to receive up to £5,000 of savings income tax-free.

British ISA

The government will not proceed with the British ISA due to mixed responses to the consultation launched in March 2024.

Non-UK Domicile tax rules

Introduction of a new internationally competitive residence-based regime

The government is removing the outdated concept of domicile status from the tax system and replacing it with a new internationally competitive residence-based regime from 6 April 2025. This includes ending the use of offshore trusts to shelter assets from Inheritance Tax and scrapping the planned 50% tax reduction for foreign income in the first year of the new regime.

Property taxation

Stamp Duty Land Tax

The government is supporting first-time and main home buyers by increasing the Higher Rates for Additional Dwellings of Stamp Duty Land Tax from 3% to 5% from 31 October 2024. These higher rates apply to purchases of second homes, buy-to-let residential properties and companies purchasing residential property and the increase will provide those looking to move home or purchase their first property with a comparative advantage over those purchasing additional property. This is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence. Those who exchanged contracts prior to 31 October 2024 are not affected by this rate increase.

Corporation Tax

Corporation Tax Small Profits Rate and marginal relief

The government will maintain the Corporation Tax Small Profits Rate and marginal relief at their current rate and thresholds. This means 9 in 10 actively trading companies, including a majority of SMEs, will have a Corporation Tax rate lower than 25%. The £1 million Annual Investment Allowance will also be kept in place to provide the certainty businesses need to invest.

Corporate Tax Roadmap

The government has published a Corporate Tax Roadmap. The Roadmap includes a commitment to cap the Corporation Tax Rate at 25%; maintain the Small Profits Rate and marginal relief at current rates and thresholds; and maintain key features as such as Full Expensing, the Annual Investment Allowance, R&D relief rates, and the Patent Box. The Roadmap also outlines areas for further exploration including a new process for advanced assurance for major projects and simplifying and improving tax administration.

Business rates reform

A discussion paper has been published setting the direction of travel for transforming the business rates system and inviting industry to a dialogue about future reforms.

VAT

No general increase to VAT rates, as per Labour’s manifesto promise.

VAT on private school fees

To help fund the government’s priorities for education and young people it is delivering on its commitment to charge VAT on private school fees and to remove business rates charitable relief in England. The government will introduce 20% VAT on education and boarding services provided for a charge by private schools from 1 January 2025. The government will also remove business rates charitable rate relief from private schools in England from April 2025.

Tax Administration

Response to the call for evidence on HMRC powers, penalties, and safeguards

The government is publishing a summary of responses to the call for evidence ‘The Tax Administration Framework Review: enquiry and assessment powers, penalties, safeguards’.

Simplifying and Improving Tax Administration

The government will engage with stakeholders before introducing a set of measures to simplify tax administration and improve customer experience in the spring.

Making better use of third-party data

The government will publish a consultation in early 2025 on modernising how HMRC acquire and use third-party data to make it easier for taxpayers to get tax right first time.

Tax reporting via payroll software

HMRC is confirming plans to mandate the reporting of benefits in kind via payroll software from April 2026 – The government confirms that the use of payroll software to report and pay tax on benefits in kind will become mandatory, in phases, from April 2026. This will apply to income tax and Class 1A National Insurance contributions (NICs).

E-invoicing

The government will publish a consultation in early 2025 to establish standards and increase the adoption of electronic invoicing.

Making Tax Digital for income tax Self-Assessment

The government is committed to delivering Making Tax Digital (MTD) for income tax Self-Assessment. The government will expand the rollout of MTD to those with incomes over £20,000 by the end of this Parliament and will set out the precise timing for this at a future fiscal event.

Modernising and mandating tax adviser registration

The government will invest £36 million to modernise HMRC’s tax adviser registration services and will mandate registration of tax advisers who interact with HMRC on behalf of clients from April 2026. The government will legislate for this in a future Finance Bill.

Inheritance Tax digitalisation

The government will invest £52 million to digitalise the inheritance tax service from 2027-28 to provide a modern, easy-to-use system, making returns and paying tax simpler and quicker.

Digitalisation of Individual Savings Accounts

Digital reporting for Individual Savings Account (ISA) managers will be mandatory from 6 April 2027. Draft legislation will be published for a technical consultation in 2025.

Pre-populating Self-Assessment tax returns with Child Benefit data (for the purposes of the High-Income Child Benefit Charge)

The government will invest £4 million to enable HMRC to pre-populate Self-Assessment tax returns with Child Benefit data to ensure the High-Income Child Benefit Charge (HIBC) is accurately calculated and reported.

Changing late payment interest rates on unpaid tax liabilities

The government will increase the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5 percentage points. This measure will take effect from 6 April 2025.

Other announcements

Increase in the National Living Wage

• The National Living Wage will increase from £11.44 to £12.21 an hour from April 2025.
• The 6.7% increase, which is worth £1,400 a year for an eligible full-time worker, will impact over 3 million workers next year.
• The National Minimum Wage for 18 to 20-year-olds will also rise will rise by £1.40 per hour from £8.60 to £10.00 an hour and marks a first step towards a single adult rate.

Alcohol duties

Draught duty cut by 1.7% (taking a penny off the cost of a pint in pubs).

Fuel Duty

Has been frozen. The 5p cut will be extended for a further 12 months and the planned increase in line with inflation for 2025-26 will be cancelled.

Tobacco and vaping

The government will renew the tobacco duty escalator at RPI +2% and increase duty by 10% on hand-rolled tobacco this year. It will also introduce a flat-rate duty on all vaping liquid from 2026, and a one-off increase in tobacco duty.

Legislation

Many of the required changes will be included in the Autumn Finance Bill 2024 or by Treasury Order. As usual, however, the Chancellor's Budget statement will include resolutions made under the Provisional Collection of Taxes Act 1968 for any measures that are expected to come into effect ahead of Finance Bill Royal Assent.

Links to further information

• Link to main Treasury news web page
• Autumn Budget 2024 ‘Red Book’
• Link to Budget documents page
• Link to Technical consultation - Inheritance Tax on pensions: liability, reporting and payment
• Link to Policy Paper Changes to rules for overseas pensions and scheme administrators
• Autumn Budget 2024 overview of tax legislation and rates (OOTLAR)
• House of Commons Library

Important information

Please note this is for general information only and is based on LV's understanding of the relevant legislation and regulations and may be subject to change.

The tax treatment of benefits depends on individual circumstances, and may be subject to change in the future.

The use of this document is at your own risk, and the content should not be used for the provision of professional advice.

LV= accept no liability for any damages, losses or causes of action of any nature arising from your use of this document.