After much pre-debate discussions, advisory notes, and webinars, the much-anticipated UK Autumn Budget arrived last week. Presented by Chancellor Rachel Reeves—the first woman to present a budget and Labour’s first in 14 years—the 2024 Budget delivered a series of headline changes and raised questions about tax impacts for both corporate and private clients. Daniel Jaffe and Stefan Le Marquand from HIGHVERN’s UK office examine the key themes, offering insights into their implications from both a corporate and private wealth viewpoint.
Corporate sector
The 2024 Budget introduces several notable changes that directly affect corporate clients, influencing tax liabilities, employee compensation, and overall business operations:
National Insurance contributions: Employers’ National Insurance contributions will increase by 1.2 percentage points from 13.8% to 15% from April 2025. The salary threshold for contributions has been lowered to £5,000 per year, raising costs for employers across sectors.
Capital Gains Tax (CGT): The lower rate for CGT has increased from 10% to 18%, while the higher rate rises from 20% to 24%. Phased adjustments to Business Asset Disposal Relief and Investors’ Relief are also included.
Pensions and talent retention: While tax-free lump sum allowances for pensions remain unchanged, death benefits from pensions could now be subject to inheritance tax starting April 2027.
Minimum wage increases: A rise of 6.7% will bring the National Living Wage to £12.21 per hour by April 2025. Additionally, the National Minimum Wage for 18-20-year-olds will increase significantly, up 16.3% to £10.00 per hour.
Business Rates Relief: Continued relief for retail and hospitality businesses, though reduced to a maximum discount of 40% and capped at £110,000.
As compliance costs rise, companies are faced with choices: either adapt rapidly to manage these increased costs or capitalize on the UK’s advantages to drive growth. Some may explore leaner operating models or invest in technology to offset rising expenses, keeping competitiveness high despite the changes.
Private wealth sector
One prominent crossover issue impacting both corporate and private clients is the increased tax on carried interest, long a topic of scrutiny. From April 2025, carried interest will be taxed at 32% (up from 28%) under a reformed regime aimed at ensuring tax fairness while preserving the UK’s standing as a global asset management hub. Other key changes affecting private clients include:
National Insurance Cost: The rise in National Insurance rates will directly impact wealthy individuals employing personal or family office staff. While incremental, these contributions could add up.
Capital Gains Tax: The increase aligns CGT rates closer to those for residential property, either making clients less likely to invest directly into growth assets (e.g. investment properties) or deferring sales of such assets
Business & Agricultural Property Relief: Reforms here are likely to hit family businesses and agricultural landowners in affluent areas hardest. With changes not effective until April 2026, clients should consult their advisers concerning what can be done before the reforms become effective.
Inheritance Tax (IHT): With IHT nil-rate thresholds frozen and a new rule bringing unused pension balances into the tax scope by 2027, clients with Self-Invested Personal Pensions (SIPPs) or QROPS could see tax impacts.
Foreign Income & Gains (FIG) Regime and Trusts: The new FIG regime (an alternative to the “non-dom” regime) allows 100% tax relief on foreign income for the first four years in the UK. However, the loss of protections for offshore trusts settled by long term UK residents could necessitate careful planning for many clients.
Additional measures include a doubled duty on private jet usage and VAT impositions on private school fees, both of which are likely to increase the cost of being a high net worth UK tax-paying individual.
These changes could mark a reset moment for private clients. Shifts in inheritance tax, sheltering of foreign income and gains, and the abolition of the non-domicile status represent not only new regulatory changes but also opportunities to reimagine wealth strategies.
Big questions and long-term outlook
The Budget raises an inevitable question: will these changes drive wealthy individuals and business owners to leave the UK? Some may choose to accelerate retirement plans abroad or relocate, especially those who are highly mobile. Additionally, the government’s commitment to tackling tax avoidance and late payments suggests a heightened compliance environment. Taking a long-term perspective, however, reveals that the UK remains a global hub of talent, innovation, and favourable tax rates compared to many European peers. Investments in R&D and the FIG regime’s early-stage tax relief demonstrate a continued effort to attract foreign investors and high-net-worth individuals.
In this environment, it’s essential for clients to work closely with their advisors, whether for complex corporate planning or personal wealth management. At HIGHVERN, our team of professionals specialises in structuring and administering corporate and wealth solutions. We are well-equipped to help navigate our clients through these changes, simplifying complex issues and collaborating with top-tier advisors to deliver robust corporate planning and wealth management strategies
