Tax
The Budget Analysis
The Budget confirmed a five year corporate tax roadmap, holding corporation tax at 19 per cent on the first £50,000 and 25 per cent above £250,000 of profit.
By David ElliottBSc FCA, Founder & Managing PartnerFigures in this piece were checked on 1 November 2024. Rates and thresholds change, so confirm anything you are relying on.
There was some positive news from the Chancellor in the form of a five-year “corporate tax roadmap”, giving business owners welcome certainty for planning ahead.
For the duration of this Parliament, corporation tax rates and thresholds will remain fixed:
- 19% on the first £50,000 of taxable profits
- 26.5% marginal rate between £50,000 and £250,000
- 25% flat rate on profits above £250,000
While stability is welcome, the £50,000 and £250,000 thresholds will not increase in line with inflation.
Important Changes That Did Not Happen
- No lifetime cap reintroduced on pension contributions
- 25% tax-free pension drawdown remains
- £60,000 annual pension allowance remains
- Carry-forward of unused pension allowances still permitted
- No employer’s NI on company pension contributions
- No change to dividend tax rates
National Living Wage – April 2025
New hourly rates from 1 April 2025:
- Age 21+ – £12.21
- Age 18–20 – £10.00
- Age 16–17 – £7.55
- Apprentices – £7.55
Employer’s National Insurance
From April 2025:
- Rate increases from 13.8% to 15%
- Secondary threshold reduces from £9,100 to £5,000
Employment Allowance: Increases to £10,500 from April 2025, benefiting smaller employers.
Capital Gains Tax
- Basic rate: 18%
- Higher rate: 24%
Business Asset Disposal Relief:
- Rate increases to 14% (April 2025)
- Rises to 18% (April 2026)
- £1m lifetime limit retained
Investor Relief
- Lifetime limit reduces to £1m
- Rate aligns with BADR increases
Inheritance Tax
- Nil-rate band frozen at £325,000 until 2030
- Main residence band frozen at £175,000
Business Property Relief: From April 2026, only the first £1m qualifies for 100% relief, with the remainder receiving 50% relief.
Stamp Duty Land Tax
From 1 April 2025:
- Residential nil-rate band reverts to £125,000
- First-time buyer band reverts to £300,000
Second Homes & Buy-to-Lets: Surcharge increases from 3% to 5% (from 31 October 2024).
Electric Vehicles
100% first-year allowance for electric company cars extended to March 2026. Charging infrastructure relief continues.
Double Cab Pickups
From April 2025, treated as company cars for tax purposes unless ordered before 5 April 2025.
ISAs
- ISA – £20,000
- Junior ISA – £9,000
- Child Trust Fund – £9,000
Limits frozen until April 2030.
Business Rates
- 40% relief for retail, hospitality and leisure (cap £110,000)
- Small business multiplier frozen
VAT on Private School Fees
VAT at 20% applies from 1 January 2025.