Accounting, Taxation

UK Autumn Budget 2024: Key takeaways for landlords and small businesses

10 min read

Chancellor Rachel Reeves delivered the Autumn Budget 2024, which included tax changes and spending measures to stimulate the economy and support businesses and households. Here’s a breakdown of the critical measures impacting landlords and small businesses in the UK.

Tax changes impacting landlords:

1. Stamp Duty Land Tax (SDLT) changes

New rates for buying additional homes
Starting 31 October 2024, buyers of additional homes and companies will see increased Stamp Duty Land Tax (SDLT) rates. The rate will go from 3% to 5% on top of the standard residential rates. Furthermore, the SDLT rate for companies and corporate bodies purchasing homes over £500,000 will increase from 15% to 17%.
 
Primary thresholds for residential properties
From 1 April 2025, the rates will revert to those in place on 22 September 2022. A 2% SDLT rate will apply to residential properties between £125,000 and £250,000, and a 5% rate will still apply to properties priced from £250,001 to £925,000.
 
SDLT relief for first-time buyers
Starting 1 April 2025, the relief for first-time buyers will also return to the rates from 22 September 2022. First-time buyers will get a 5% discount when purchasing homes that cost between £250,000 and £425,000 (down from the previous range of £250,000 to £625,000).
 
SDLT for residential leases
From 1 April 2025, the threshold for when SDLT is charged will drop to £125,000 from £250,000, as previously announced.

2. Capital gains tax (CGT) changes

Landlords must pay Capital Gains Tax (CGT) on the profit they earn when they sell a property. Starting on 30 October 2024, the primary rates for Capital Gains Tax will change. For most assets, excluding residential property and carried interest, the rates will rise from 10% and 20% to 18% and 24%, respectively. Additionally, for trustees and personal representatives, the primary rate will increase from 20% to 24% for disposals made on or after the same date.

3. Inheritance tax changes

The government has announced that the inheritance tax threshold will stay at £325,000 until 2030. This means you can inherit the first £325,000 of any estate without paying tax. If the estate includes a home passed to direct descendants, this limit increases to £500,000. It can go up to £1 million if a tax-free allowance is given to a surviving spouse or civil partner. Because of various tax-free and gifting allowances, only six per cent of estates are subject to inheritance tax.

Tax changes impacting small businesses:

1. Employer National Insurance Contributions (NIC) changes

From April 2025, employers will have to pay more in National Insurance (NI) for their workers. The Chancellor announced that the Employer’s National Insurance rate will increase from 13.8% to 15%. 
 
The threshold falls
The threshold for paying this tax will also change. It is currently £9,100, but it will be lowered to £5,000. This means employers will pay a higher rate on more significant earnings.
 
This will also impact those company directors paying themselves with a minimum salary and the remainder in dividends; the minimum salary will need to drop to remain outside of the threshold.
 
Employment Allowance rises
At the same time, the Employment Allowance for small employers will go up. The allowance is now £5,000 but will increase to £10,500. There will no longer be a £100,000 limit on NI contributions for eligibility, pulling 865,000 employers into paying no NI. However, limited companies that pay NI for only one employee will not qualify for the allowance if that employee is also a company director.

2. Business Asset Disposal Relief (BADR)

Changes to Business Asset Disposal Relief (BADR), previously known as entrepreneurs’ relief, have raised concerns among business owners.

BADR currently charges a tax rate of 10% on profits when founders sell their businesses up to a limit of £1 million. This rate will stay at 10% this year but will increase to 14% in April 2025 and 18% from 2026-27.

Many startups worry that these changes to BADR will make the UK a less attractive place to start and sell a business. Some have even considered leaving the UK or selling their businesses quickly before the new budget takes effect.

3. National living wage

Starting in April 2025, the National Living Wage (NLW) for adults will increase by 6.7%, going from £11.44 to £12.21 per hour. For 18-20-year-olds, the hourly rate will rise from £8.60 to £10.00. 
 
Due to the rise in employer National Insurance contributions (NICs) and changes in employment laws, many small businesses may find it hard to manage without the support of the Employment Allowance.

4. Research and development

The Labour Party has delivered certainty here. They have confirmed that the current R&D tax relief rates will be maintained until the end of the Parliament. They have also increased funding for the R&D compliance department, so we can anticipate far greater scrutiny of compliance checking.
 
There is also more general support, with £20 billion protected for research and development (R&D). At least £6.1 billion will go towards core engineering, biotechnology, and medical science research. 
 
The aerospace sector will receive £1 billion in multi-year funding; the automotive industry will receive £2 billion specifically for electric vehicles, and £520 million will support new life sciences and innovative manufacturing.

5. Change in business rates

Business rates for retail, hospitality, and leisure businesses have changed. Starting in 2026/27, two new lower business rates will be introduced for these sectors. 
 
The government will permanently reduce business rates for retail, hospitality, and leisure businesses starting in 2026-27. Until then, businesses will receive a 40% discount on their business rates, with a maximum discount of £110,000.

6. Increased interest rates for late tax payments

Late payment interest accrues on unpaid taxes, including Income Tax, Capital Gains Tax, and specific National Insurance contributions, when not settled by the specified deadline. The current interest rate is established at the Bank of England base rate plus 2.5%, resulting in an overall interest charge of 7.5%. To address the tax gap, the government has announced that this rate will increase by 1.5 percentage points, adjusting to the base rate plus 4%, effective from 6th April 2025.

7. Corporate tax roadmap

The government’s strategic plan encompasses a commitment to maintaining the Corporation Tax cap at 25%, preserving the Small Profits Rate of 19%, at least until the financial year 2026.
 
Additional support was confirmed by sustaining full expensing (a capital allowance providing a 100% deductible first-year allowance on qualifying expenditure), the Annual Investment Allowance, Research and Development relief rates, and the Patent Box to encourage innovation and new product development.

Conclusion

The Autumn Budget 2024 has brought challenges and opportunities for UK landlords and small businesses. While some measures may increase costs and administrative burdens, others offer potential benefits through tax reliefs and incentives. Our tax experts at Golding Accountancy will help you navigate the intricacies of the changes and keep your business profitable.

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