Capital Gains Tax
1. Rate Increases:
- Who’s affected: Anyone making disposals of assets (like shares, second homes, or valuable items) on or after October 30, 2024.
- The old rates: 10% for basic-rate taxpayers and 20% for higher-rate taxpayers.
- The new rates: 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
- Trustees and personal representatives: Their rate also rises from 20% to 24%.
2. Business Asset Disposal Relief (BADR) Changes:
- What it is: A special rate for those selling all or part of their business.
- Current rate: 10%
- Changes: Increases to 14% from April 6, 2025, and then to 18% from April 6, 2026.
- Important note: This relief has a lifetime limit of £1 million in gains.
3. Investors’ Relief:
- What it is: Similar to BADR, but applies to gains on investments in unlisted trading companies.
- Rate changes: Follow the same increases as BADR (14% in 2025, 18% in 2026).
4. Other CGT Considerations:
- Annual exempt amount: This remains at £6,000 for the 2024-25 tax year.
- Losses: You can still offset capital losses against gains.
- Reporting: You’ll need to report and pay CGT through Self Assessment.
Why the Changes?
The government aims to raise revenue and potentially reduce inequality. Higher CGT rates may also discourage speculative investments and encourage longer-term holdings.
Employers National Insurance
1. Increased Rate:
- The rate of Class 1 secondary NICs (paid by employers) has increased from 13.8% to 15%. This applies to earnings above the secondary threshold.
- This change takes effect from April 6, 2025.
2. Lowered Threshold:
- The secondary threshold for Class 1 NICs has been reduced from £9,100 to £5,000 per year. This means employers will start paying NICs on employee earnings above £5,000, rather than the previous £9,100.
- This change also takes effect from April 6, 2025.
3. Increased Employment Allowance:
- The Employment Allowance, which gives some businesses a reduction on their NICs bill, has been increased from £5,000 to £10,500.
- This means eligible businesses can reduce their NICs payments by up to £10,500 per year.
- This change also takes effect from April 6, 2025.
Impact of the Changes:
- Increased costs for employers: The higher rate and lower threshold will increase NICs costs for many employers.
- Potential impact on wages and jobs: Some businesses may absorb the increased costs, while others may pass them on through lower wages or reduced hiring.
- Support for smaller businesses: The increased Employment Allowance aims to offset the impact of the changes for smaller businesses.