United Kingdom

Autumn Budget 2024

The Chancellor of the Exchequer delivered her Budget on 30 October 2024, announcing several changes relevant to be taxation of individuals.

The following announcements are now in effect:

• The lower rate and main rate of capital gains tax (CGT) increased from 10% and 20% to 18% and 24%, respectively, for disposals made on or after 30 October 2024.
• The remittance basis of taxation for non-UK domiciled individuals was abolished, with the concept of domicile being replaced with a residence-based regime from 6 April 2025.Transitional measures designed to smooth the impact of the changes were also introduced. See Basis of taxation from 6 April 2025 in the Taxes on personal income section below for more details.
• The rate of CGT applying to carried interest increased to 32% from 6 April 2025 with further changes to follow (see below).
• The rate of employer national insurance contributions (NICs) increased from 13.8% to 15% from 6 April 2025. The secondary threshold (the amount at which employers start to pay NICs) reduced from GBP 9,100 to GBP 5,000 a year from 6 April 2025 until 6 April 2028 and will then increase in line with the consumer price index (CPI) thereafter.

The following announcements were also made:

• Agricultural property relief and business property relief will be reformed from 6 April 2026 with 100% relief for the first 1 million pounds sterling (GBP) of combined assets and 50% relief thereafter.
• Relief for shares not listed on a recognised stock exchange (such as the Alternative Investment Market [AIM]) will also be halved to 50% from 6 April 2026.
• The carried interest regime will move to the income tax framework from 6 April 2026 onwards. ‘Qualifying’ carried interest will be taxed at an effective rate of 34.075% for additional rate taxpayers. The definition of ‘qualifying’ carried interest will include assessing the holding period of the fund and whether services are performed in the UK. The Government intends to introduce statutory limitations for qualifying carried interest to mitigate uncertainty as to which jurisdiction has the primary taxing rights. Draft legislation is expected before the parliamentary Summer Recess 2025. 
• From 6 April 2027, unspent pension pots (including death benefits payable from a pension) will be brought into a person's estate for inheritance tax (IHT) purposes.