Autumn Budget 2024

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Autumn Statement 2024

We have a new government, a new Chancellor and an outline of a new Industrial Strategy. And now we have a Budget outlining what the government’s main tool to deliver change will look like. So what is the verdict? Our Tax and Economics leadership teams share their reactions.

Key announcements:

Corporate Tax roadmap

Business rates

Other measures

Corporate Tax roadmap

The Corporate Tax roadmap aims to provide predictability, stability and certainty to businesses and investors. Key features include:

Corporation Tax Rate: Capping the headline rate of Corporation Tax at 25% for the duration of the Parliament whilst ensuring that the UK’s regime remains competitive. The Small Profits Rate and marginal relief will be maintained at their current rates and thresholds.
Capital allowances: The government will maintain permanent full expensing, the £1m Annual Investment Allowance, writing down allowances and the Structures and Buildings Allowance. The government will further explore providing clarity to businesses on what qualifies for different capital allowances, consolidating and simplifying the Capital Allowances Act 2001 and extending full expensing to assets bought for leasing when fiscal conditions allow. A consultation will be launched to explore the tax treatment of predevelopment costs, aiming to provide greater clarity and simplification
R&D Tax Reliefs: The existing rates for the merged R&D Expenditure Credit scheme and the Enhanced Support for R&D Intensive SMEs will be maintained. HMRC will proceed with establishing the R&D expert advisory panel and continuing to improve signposting and guidance on the reliefs. An R&D disclosure facility will be launched by the end of the year and use its powers to tackle agents who breach agent standards. The government has also committed to discussing widening the use of advance clearances in R&D reliefs with the intention to consult on lead options in Spring 2025.
Patent Box and intangible assets: The government has committed to maintaining the Patent Box and preserving the intangible fixed assets regime.
Other incentives: The government will maintain an Audio-Visual Expenditure Credit for firm and high-end TV producers and a Video Game Expenditure Credit for video game developers.
Land Remediation Relief: The government will launch a consultation to review the effectiveness of Land Remediation Relief in Spring 2025.
Administration of Corporation Tax: The government will launch a consultation in Spring 2025 to develop a process through which investors in major projects can obtain increased tax certainty in advance.
Transfer Pricing Reforms: The government will further consult on reforms to the UK's rules on transfer pricing, permanent establishments, and Diverted Profits Tax in Spring 2025. The government will consult on further changes to the transfer pricing rules including considering lowering the thresholds for medium-sized businesses and a requirement to report cross-border related party transactions to HMRC. The government will review the transfer pricing treatment of cost contribution arrangements.
OECD Pillar 1 and 2:The government reaffirmed its commitment to introducing Pillar 1 and Pillar 2 rules that are aligned to international developments, and are considering opportunities for simplification or rationalisation of the UK’s tax rules for taxing cross-border activities in light of Pillar 2. The government also confirmed legislation will be included in Finance Bill 2024-25 to implement the Pillar 2 Undertaxed Profits Rule (UTPR), taking effect for accounting periods beginning on or after 31 December 2024..

Business rates

Discussion paper - The government has published a Business Rates discussion paper with the stated aim of reforming business rates to protect the high street, encourage investment; and create a fairer system.

Small business multiplier - For 2025-26, the small business multiplier in England will be frozen at 49.9p. The standard multiplier will be uprated by the September 2024 CPI rate to 55.5p.

RHL properties - For 2025-26, the existing 75% relief for eligible Retail, Hospitality and Leisure (RHL) properties in England will be replaced by a 40% relief, which will continue to be limited to a maximum discount of £110k. Starting from 2026-27, the government will implement permanently lower multipliers for RHL properties, offset by a higher multiplier for properties with Rateable Values above £500,000.

Other measures

Green First Year Allowances - The government will extend the 100% First Year Allowances for qualifying expenditure on zero-emission cars and electric vehicle charge points to 31 March 2026 for corporation tax purposes and 5 April 2026 for income tax purposes.

Independent Film Tax Credit - UK films with budgets under £15 million and a UK lead writer or director will be able to claim an enhanced 53% rate of Audio-Visual Expenditure Credit from 1 April 2025.

Theatre, Orchestra, and Museums Tax Reliefs - From 1 April 2025, the rates of Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Exhibitions Tax Relief will be set at 40% for non-touring productions and 45% for touring productions and all orchestra productions.

Energy Profits Levy - As previously announced, from 1 November 2024 the rate of the Energy Profits Levy will increase by 3% to 38% and the levy’s 29% investment allowance will be abolished. Additionally, the rate of the decarbonisation allowance will be cut from 80% to 66% from the same date.

Alternative Finance - Tax rules for alternative finance will be amended to put certain tax consequences of alternative and conventional financing arrangements on a level playing field from 30 October 2024.

Reserved Investor Fund - The government will introduce the Reserved Investor Fund (Contractual Scheme) and make minor changes to the tax rules in respect of Co-ownership Authorised Contractual Schemes.

Business tax at a glance

Business Tax Roadmap

A package of measures announced to give certainty, predictability and stability to businesses and investors

National Insurance for employers

Threshold cut to £5,000, and rate increase of 1.2% to 15% from April 2025

Non-domiciled individuals

Abolition of remittance basis from April 2025

Carried interest

One year increase in the CGT rate to 32% and then moving to the income tax regime

Business rates

Consultation on reforms

National Living and Minimum wages

NICs

Payrolling Benefits in Kind

Overseas Workday Relief

Other measures

National living and minimum wages

The National Living Wage for employees aged 21 and over will increase by 6.7% to £12.21 per hour from April 2025. The National Minimum Wage for 18-20 year olds will rise to £10.00 per hour.

National Insurance Contributions (NICs)

Employer NICs - The rate of employer NICs will increase from 13.8% to 15% from 6 April 2025. The Secondary Threshold (the amount at which employers start to pay NICs) will be reduced from £9,100 to £5,000 a year from 6 April 2025 until 6 April 2028, and then increased by CPI thereafter.

Employment Allowance - The Employment Allowance will increase from £5,000 to £10,500, and the £100,000 employer’s NIC threshold for eligibility will be removed from 6 April 2025 increasing its availability to a larger number of employers.

Payrolling Benefits in Kind

Building on earlier announcements, from April 2026 employers will be required to report and pay tax and Class 1A NIC on benefits in kind on a real time basis, with the exception of accommodation and loans. From this date, accommodation and loans may be payrolled on a voluntary basis, with mandatory payrolling to follow at a later date. In order to manage adjustments that may be required to benefits reporting, a new end of year process will be introduced, with further details to follow on how this will work in practice and in which scenarios it can be applied.

Overseas Workday Relief

As part of the reform of the non-domicile regime, HMRC have announced that, whilst overseas workday relief will continue for affected employees working fully or partly outside the UK, there are material operational changes including the limiting of relief to the lower of 30% of the qualifying employment income or £300,000 per tax year, the extension of the qualifying period from three to four years and the simplification of current payroll processes.

Other measures

Company car tax - The government is setting Company Car Tax (CCT) rates for 2028-29 and 2029-30 as follows:

Appropriate Percentages (APs) for zero-emission and electric vehicles will increase by 2% per year, reaching an AP of 9% in 2029-30.
For cars with emissions of 1-50 g/km of CO2, including hybrid vehicles, APs will rise to 18% in 2028-29 and 19% in 2029-30.
All other vehicle bands will see APs increase by 1% per year, with the maximum AP reaching 39% in 2029-30.

Car ownership arrangements - The government will publish draft legislation to close loopholes in car ownership arrangements, where an employer or a third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period to avoid company car tax. The changes will take effect from 6 April 2026.

Umbrella companies - From April 2026, recruitment agencies will be responsible for accounting for PAYE on payments made to workers supplied via umbrella companies. If no agency is involved, this responsibility will fall to the end client business.

Apprenticeship levy - The Government announced a £40 million investment to transform the Apprenticeship Levy into a more flexible Growth and Skills Levy.

Employment taxes at a glance

Employers’ NICs

Rates increased and starting point cut, aiming to raise over £20 billion each year

National living wage

Increased by 6.7% to £12.21 per hour

Benefits in kind

Real time reporting being introduced from April 2026

Income tax

Non-domiciled individuals

Capital gains tax

Carried interest

Inheritance tax

Income tax

There are no changes to headline rates or thresholds, with current thresholds remaining frozen until April 2028 as previously announced. However from April 2028, rates will ‘unfreeze’ and increase in line with inflation.

Non-domiciled individuals

The remittance basis of taxation for non-UK domiciled individuals will be abolished, with the concept of domicile being replaced with a residence based regime from 6 April 2025.

Capital gains tax

The lower and higher main rates of CGT will increase to 18% and 24% respectively for disposals made on or after 30 October 2024. The rate for business asset disposal relief and investors' relief will remain at 10% on gains of £1 million for this year, increasing to 14% from 6 April 2025 and will match the main lower rate of 18% from 6 April 2026.

Carried interest

The rate of CGT applying to carried interest will increase to 32% from 6 April 2025 and then the carried interest regime will move to the income tax framework from 6 April 2026 onwards, with a consultation in the meantime on what qualifies as carried interest.

Inheritance tax

Agricultural property relief and business property relief will be reformed from 6 April 2026 with 100% relief for the first £1 million of combined assets and 50% relief thereafter. Relief for shares not listed on a recognised stock exchange (such as AIM) has also been halved to 50% from 6 April 2026. From 6 April 2027, unspent pension pots (including death benefits payable from a pension) will be brought into a person's estate for IHT purposes.

Personal taxes at a glance

Income tax

Rates and thresholds frozen until 2028

Non-domiciled individuals

Abolition of remittance basis from April 2025

Carried interest

One year increase in the CGT rate to 32% and then moving to the income tax regime

CGT

Main rate will increase with effect from Budget day

IHT

Business Property Relief and Agricultural Property Relief will be restricted from 2026

Private education

Duties

Environmental measures

Other measures

Private education

VAT - From 1 January 2025, the government will introduce VAT at 20% on private school fees (including boarding services provided by private schools).

Business rates - The government will soon introduce legislation to remove business rates relief for private schools from April 2025.

Duties

Fuel duty - The government will freeze fuel duty and extend the temporary 5p cut for one further year, and the planned increase in line with inflation for 2025-26 will be cancelled. This represents a saving of £59 in 2025-26 for the average car driver.

Tobacco duty rates - The government will renew the tobacco duty escalator at RPI+2% on all tobacco products until the end of this Parliament and increase the rate on hand-rolling tobacco by a further 10% this year. These changes will take effect from 6pm on 30 October 2024 and will be included in Finance Bill 2024-25.

Vaping products duty - The government will introduce a flat-rate excise duty on all vaping liquid from 1 October 2026 at £2.20 per 10ml vaping liquid, accompanied by an equivalent one-off increase of £2.20 per 100 cigarettes / 50g of tobacco in tobacco duty to maintain the financial incentive to switch from tobacco to vaping.

Alcohol duty - The government will cut alcohol duty rates on draught products by 1.7% and increase alcohol duty rates on non-draught alcoholic products in line with RPI inflation. These measures will take effect from 1 February 2025. The current temporary wine easement will also end as planned on 1 February 2025.

Environmental measures

Electric vehicles (EVs) - The government will maintain existing incentives for EVs in company car tax from 2028. It will also increase the differential between fully electric and other vehicles in the first rates of Vehicle Excise Duty beginning in April 2025. This is expected to raise £400m by the end of the forecast period.

Air Passenger Duty (APD) - The government will increase APD no more than £2 for those flying to short-haul destinations in economy class and £12 for long-haul destinations, and relatively more for premium economy and business class passengers.

The higher rate, which currently applies to larger private jets, will rise by a further 50% in 2026-27. From 2027-28 onwards, all rates will be uprated by forecast RPI and rounded to the nearest penny. The government is also consulting on extending the scope of the APD higher rate to capture all passengers travelling in private jets already within the APD regime.

Climate Change Levy (CCL) - The main rates of the CCL for gas, electricity, and solid fuels will be uprated in line with RPI in 2026-27. The main rate for liquefied petroleum gas will continue to be frozen. The reduced rates of CCL will remain at an unchanged fixed percentage of the main rates.

Carbon Price Support - The government will maintain Carbon Price Support rates in Great Britain at a level equivalent to £18 per tonne of CO2 in 2026-27.

Plastic Packaging Tax (PPT) - The government will increase the PPT rate for 2025-26 in line with CPI inflation. In response to the PPT consultation on mass balance approach, the government confirmed that businesses will be permitted to use a mass balance approach to evidence recycled content in chemically recycled plastic for PPT.

UK Carbon Border Adjustment Mechanism (CBAM) - The UK CBAM will be introduced on 1 January 2027, placing a carbon price on goods imported to the UK from the aluminium, cement, fertiliser, hydrogen, and iron & steel sectors. The registration threshold will be set at £50,000.

Landfill tax rates - The government has confirmed the previously announced adjustment to Landfill Tax rates from 1 April 2025, which maintains the incentive to manage waste more sustainably.

The government will announce future Landfill Tax rates at the fiscal event immediately before, so those applicable from 1 April 2026 will be announced at Budget 2025.

Other measures

Soft Drinks Industry Levy (SDIL) - The government will increase the SDIL over the next five years to reflect the 27% CPI inflation between 2018 and 2024. Annual rate increases will take place starting on 1 April 2025, and will also reflect future yearly CPI increases. The government will also review the current SDIL sugar content thresholds and the current exemptions for milk-based and milk substitute drinks.

Indirect taxes at a glance

Private education

VAT at 20% on private school fees to be introduced from 1 January 2025

Fuel duty

Fuel duty frozen and the temporary 5p cut has been extended by one further year

Tobacco duty

Tobacco duty escalator will be renewed at RPI+2% until the end of this Parliament

Vaping products duty

A flat-rate excise duty will be introduced on all vaping liquid from 1 October 2026 at £2.20 per 10ml vaping liquid

APD

Increase in Air Passenger Duty of no more than £2 for short-haul and £12 for long-haul economy flights, but relatively more for premium economy and business flights, and significant increases for private jets

CCL and Carbon Price Support

Rates for gas, electricity and solid fuel to be uprated in line with RPI in 2026-27 and Carbon Price Support rates to be maintained

Carbon price of goods

UK Carbon Border Adjustment Mechanism to be introduced on 1 January 2027

HMRC resources

As previously announced, significant resources will be allocated to hiring over 5,000 compliance staff and debt management staff at HMRC. Investment will also go into modernising HMRC's systems including customer services and the IHT system.

Late payment charges

From 6 April 2025, the interest rate on unpaid tax liabilities charged by HMRC will increase by 1.5 percentage points.

Charities

The existing charity tax rules will be strengthened from April 2026 to prevent abuse and ensure that the intended tax relief is only given to charities.

Stamp Duty Land Tax (SDLT)

The SDLT surcharge on second homes will increase to 5% with effect from 31 October 2024.

Other measures at a glance

HMRC Resources

Additional compliance and debt management staff will be hired by HMRC

Unpaid tax liabilities

Late payment charges will be increased by 1.5% from 6 April 2025

Charity tax rules

Rules to be strengthened from April 2026

SDLT

The surcharge on second homes will increase to 5% from 31 October 2024

Autumn Budget reactions

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In the press

“If international markets continue to react favourably, that will give businesses greater confidence and enhance the UK’s standing on the global stage.”

_{Marco Amitrano Senior Partner, PwC UK}

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“The Budget has been a concoction of sweet and sour for individuals and businesses.”

_{Claire Blackburn, Head of Tax, PwC UK}

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“The Chancellor's statement today marked a clear break with the past. Many advanced economies around the world are becoming more activist, diverting resources to reflect global challenges in defence, digitalisation, climate change and deglobalisation. The Chancellor's Budget was in part a mirroring of this.”

_{Barret Kupelian, Chief Economist, PwC UK}

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“There are some encouraging signs the Government is listening to feedback on how the tax system can be improved to provide the certainty that businesses need to support investment.”

_{Colin Graham, Head of Tax Policy, PwC UK}

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“October has been a milestone month for the Labour Government's 'Making Work Pay' initiative, marked by the introduction of the Employment Rights Bill, significant increases to the National Living Wage, (NLW), and today's announcement of an increase in Employer’s National Insurance Contributions in the budget.”

_{Paula Letorey, Tax Partner, PwC UK}

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