The October 2024 Budget

The October 2024 Budget brought a lot of changes, both immediately and for the future. Here are some of the bits you need to know –

Capital Gains Tax

Effective immediately, the Capital Gains Tax rates were increased from 10% to 18% for basic rate tax payers and from 20% to 24% for higher rate tax payers.

Pensions

Perhaps the biggest change is that from 6 April 2027, most pension death benefits will be included in the estate for IHT purposes.

The Government has opened a consultation on the processes required to implement the changes. Responses must be in by 22 January 2025. We will be able to provide further information once it is made available.

Second Homes Tax in Scotland

For transactions on or after 5 December 2024 the Additional Dwelling Supplement is 8% of the purchase price.

Business Asset Disposal Relief

From 6 April 2025, the rate for Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14%. This will further rise from 14% to 18% on 6 April 2026.

Business Relief & Inheritance Tax

Under current rules, certain business interests and agricultural property are relieved from IHT by either 50% or 100% (known as ‘business property relief’ and ‘agricultural property relief’).  There is currently no cap on the value of assets that can be relieved in this way.  From 6 April 2026, however, the 100% relief will be capped at £1m on the combined value of business interests and agricultural property.  Any assets that would currently enjoy 100% relief and exceed that £1m limit will receive only 50% relief, leading to an effective IHT rate on those assets of 20% (not the usual 40%).  

AIM

IHT relief on AIM Shares will be restricted to 50%.  This means that after the 6^th of April 2026 an AIM portfolio worth £1 million, which currently will pass IHT free, will attract an IHT bill of up to £200,000.  And, unlike completely unlisted shares, AIM shares will not benefit from the newly introduced £1 million Business Property Relief tax free allowance at all.