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UK Autumn Budget 2024: what financial advisers need to know

6 mins read
by Rachel Carey
Last updated October 30, 2024

Today, 30 October 2024, the UK government’s revenue and spending decisions for the next financial year have been announced. Discover some of the key changes the Autumn Budget introduces and when these come into effect.

Summary

  • The Autumn Budget will raise taxes by £40 billion, with several measures playing key roles.  
  • From April 2025, national insurance (NI) contributions for employers will rise from 13.8% to 15%, raising an expected £25 billion annually.  
  • The freeze on NI and tax thresholds will not be extended beyond 2028.  
  • The Budget also sees an increase in capital gains tax rates, from 10% and 20% to 18% and 24% for basic and higher-rate taxpayers, respectively.  
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What are the key changes in the Autumn Budget 2024?

With taxes expected to increase by £40 billion, there is a lot for you and your clients to be aware of.  

Here are some of the key changes announced today by chancellor Rachel Reeves that will impact your clients:

Pensions

During her speech, Rachel Reeves announced a commitment to the ‘triple lock.’ This means the state pension will increase in line with inflation, average wages, or 2.5%.  

This means that spending on the state pension is expected to rise 4.1% in 2025-26, with over 12 million pensioners across the UK seeing an increase of £470, according to the chancellor.

Reeves also announced that inherited pensions will be brought into inheritance tax (IHT) from April 2027. This is a big change for retirement planning and will likely be a cause for concern for many consumers.  

Pension speculation was rife in the lead-up to the Autumn Budget, making it one of the most anticipated topics of the chancellor’s speech. Therefore, it’s highly likely both your new and existing clients will have questions about what these changes mean for their retirement plans.  

Inheritance tax

The chancellor announced that the freeze on the IHT threshold will be extended for another two years to 2030.  

This means the first £325,000 of any estate, the ‘nil rate band,’ can be inherited tax-free. This rises to £500,000 if the estate includes a residence passed to direct descendants. For surviving spouses or civil partners, the tax-free allowance is £1 million.  

With recent HMRC statistics revealing that only approximately 4% of estates pay IHT, this news is surprising, as IHT was one of the most likely candidates for reform in the Budget. 

However, it was also announced that from April 2026, the first £1 million of combined business and agricultural assets will be exempt from IHT. For assets over £1 million, IHT will apply with 50% relief, at an ‘effective rate of 20%.’  

Capital gains tax

Capital gains tax (CGT) for basic-rate taxpayers will rise from 10% to 18%. For higher-rate taxpayers, it rises from 20% to 24%. This comes into effect on 30 October 2024.  

Tax rates for residential property remain unchanged, at 18% and 28%.  

Prior to the Budget, it was speculated the government could choose to reduce the threshold at which you pay CGT, however this did not occur. The threshold remains at £3,000 for the 2024/25 tax year.  

For carried interest, CGT rates will increase to 32% from April 2025.  

Income tax  

While the chancellor stated tax rates will not change for working people, she did announce there will be no extension to the freeze in income tax and NI thresholds beyond 2028.  

This means that from April 2028, personal tax thresholds will rise in line with inflation. 

So this means people may pay less tax and are less likely to be pushed into a higher tax band when their wages increase.  

National Insurance for employers  

During her speech, Reeves announced that employers will pay more in NI contributions from 13.8% to 15%.  

Additionally, the threshold when employers start paying NI will be lowered from £9,100 to £5,000. However, the chancellor also announced that the amount employers can claim back from their NI bill will rise from £5,000 to £10,500.  

As it currently stands, employers pay 13.8% in NI contributions on employees’ salaries. This 1.2% rise could potentially bring in an estimated £25 billion annually, according to reports.  

However, it’s worth noting that many experts believe that while workers won't pay these taxes directly, the costs could eventually be passed down to them in other ways, such as reduced salaries or job benefits.   

Stamp duty  

From 31 October, stamp duty for second homes, buy-to-let residential properties, and companies purchasing residential properties will rise from 3% to 5%.  

For first-time buyers, while the chancellor did not announce any specific policy changes, she did state she was committed to supporting first-time buyers.  

She believes this increase will help first-time buyers by making the tax system fairer.  

The 0% stamp duty threshold is set to go back down to £300,000 from £425,000, in April 2025 for first-time buyers in England and Northern Ireland. Buyers will have to wait for confirmation, with many hoping it will be extended.

Since its introduction, the stamp duty breaks have saved the average homebuyer £2,500.   

The Office for Budget Responsibility 

The OBR estimates that CPI inflation will average 2.5% this year and 2.6% in 2025, while real gross domestic product (GDP) growth is expected to be 1.1% in 2024 and 2% in 2025.  

During her speech, Reeves stated that the OBR claimed the previous government did not provide all the necessary information to make accurate comments on the Spring Budget.  

If the OBR had received all the information, its spending forecasts would be ‘materially different’ from what was promised.  

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How can advisers support their clients?

The Autumn Budget can often create a lot of stress and uncertainty for people. Changes to taxes, pensions, and property can be overwhelming.

This is where a financial adviser comes in.

Where changes cause uncertainty, advisers can create calm.  

By remaining up to date on all changes and being ready to discuss their implications with your clients.

By reviewing portfolios, revising strategies, and using your expertise and skills, you can help your clients make informed decisions.

It’s also good to remember that following the Autumn Budget announcement, many people will seek out professionals.

For a lot of these people, it may be their first time working with an expert financial adviser. Recent Unbiased research found that 75% of leads through Unbiased had never used a financial adviser before.

So, it’s important to go at their speed, speak to them on their level, be reassuring and provide personalised advice so they can achieve their best outcomes.

Want to work with Unbiased?

Changes made during the Autumn Budget 2024 provide financial advisers with the opportunity to highlight their services and ultimately deliver greater value for their clients.

For over 10 years, Unbiased has played an instrumental role in creating a greater number of connections between consumers and advisers.  

Unbiased Pro will help you grow your firm by matching you with suitable clients, delivering them straight to your inbox, and giving you all the tools you need to convert leads into loyal customers.  

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Author
Rachel Carey
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.