In this month’s Enews, we look at the major changes made in Rachel Reeves’s first Budget. We also have Budget reaction from business groups and a National Living Wage increase to update you on. We look at analysis of the rise in employers’ National Insurance contributions (NICs) made in the Autumn Budget. We also have a self assessment reminder from HMRC and the latest fraud data. We look at HMRC’s warning to landlords with undisclosed property incomes. There is news on the government’s digital trade platform for imports and exports and research on wills. Finally we look at the business rate cut on the way for retail, hospitality and leisure properties. There is also news on student loan refunds and pension reforms to update you on.
Article Index
- Chancellor promises to drive growth and raises £40 billion in taxes
- Autumn Budget – the business reaction
- National Living Wage rises by 6.7%
- Employer NICs rise may have unforeseen consequences
- Under 100 days to go until self assessment deadline
- Over £570 million stolen by fraudsters in first half of 2024
- HMRC warns landlords to disclose earnings
- Business frustrated at halt in rollout of digital trade platform
- Almost half of UK adults have not written a will
- Permanent business rate cut for high street on the way
- More than 400,000 student loan customers use digital refund service
- Pension reforms ‘must unlock growth’
Chancellor promises to drive growth and raise £40 billion in taxes
Chancellor Rachel Reeves pledged to ‘invest, invest, invest’ to drive growth and ‘restore economic stability’ in the Autumn Budget.
The Budget, which was Labour’s first in over 14 years and the first ever delivered by a female Chancellor, saw £40 billion in tax announcements.
Ms Reeves repeated her claims that the government had inherited a £22 billion ‘black hole’ in the public finances from the Conservatives.
Pre-Budget speculation had centred on the likelihood of increases to employers’ National Insurance contributions (NICs), Capital Gains Tax (CGT) and Inheritance Tax (IHT).
The Chancellor announced an increase to the rate of employer NICs by 1.2 percentage points to 15% from 6 April 2025. However, the Secondary Threshold – the level at which employers become liable to pay NICs on each employee’s salary – will reduce from £9,100 per year to £5,000 per year.
CGT on non-residential assets will increase from 10% to 18% for those paying the lower rate, and 20% to 24% for those paying the higher rate for disposals from 30 October 2024. These new rates will match the residential property rates. The CGT rates applicable to assets qualifying for Business Asset Disposal Relief (BADR) and Investors’ Relief will remain at 10% this year, before rising to 14% from April 2025 and 18% from April 2026.
The IHT nil rate band remains unchanged at £325,000 although from April 2027 inherited pension pots will be brought into the IHT net. The government says this will remove a distortion which has led to pensions being used as a tax planning vehicle to transfer wealth rather than their original purpose to fund retirement.
From April 2026, agricultural property relief and business property relief will be reformed. The highest rate of relief will continue at 100% for the first £1 million of combined business and agricultural assets on top of the existing nil rate bands, fully protecting the majority of businesses and farms. The rate of relief will reduce to 50% after the first £1 million.
The Chancellor also confirmed that VAT will be in on private school fees and abolishment of the non-dom tax regime.
Ms Reeves said she would protect living standards by unfreezing the thresholds on Income Tax and NICs from 2028 while she extended the cut in Fuel Duty for another year.
Reeves said:
‘The choices I have made today are the right choices to restore stability to our public finances, to protect working people, to fix our NHS and to rebuild Britain.
‘That does not mean that these choices are easy, but they are responsible.’
Internet link: GOV.UK
Autumn Budget – the business reaction
Business groups have reacted to Chancellor Rachel Reeves’ Autumn Budget speech.
The Confederation of British Industry (CBI) said that the Chancellor ‘had difficult choices to make to deliver stability for the economy’.
Rain Newton-Smith, Chief Executive of the CBI, commented:
‘A more balanced approach to our fiscal rules which prioritises capital investment should help to unlock private sector investment in our infrastructure and net zero transition over the long-term.
‘While the Corporation Tax Roadmap will help create much needed stability, the hike in National Insurance contributions (NICs) alongside other increases to the employer cost base will increase the burden on business and hit the ability to invest and ultimately make it more expensive to hire people or give pay rises.’
Meanwhile, Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), labelled the fiscal event a ‘tough Budget for business’. She continued:
‘While some protection for smaller firms is welcome, the increase in employer NICs will place a further cost burden on business. This, coupled with a 6.7% increase in the National Living Wage (NLW) means many firms will find it more challenging to invest and recruit in the short-term.
‘But the Chancellor has looked to offset the upfront hit on firms by outlining a longer-term framework to provide stability for the economy.’
The Institute of Directors (IoD) branded the Autumn Budget as offering ‘short-term pain for the business community’.
Roger Barker, Director of Policy at the IoD, said:
‘The government has chosen to impose a significant new tax burden on business as a means of achieving an immediate boost to its public sector spending priorities. The risk is that this will exert a negative impact on business confidence, with worrying implications for the economy’s future growth trajectory.’
Internet link: CBI website BCC website IoD website
National Living Wage rises by 6.7%
Over three million workers will receive a pay boost after Chancellor Rachel Reeves confirmed the National Living Wage will increase from £11.44 to £12.21 an hour from April 2025.
The 6.7% increase is worth £1,400 a year for an eligible full-time worker. The National Minimum Wage for 18 to 20-year-olds will also rise from £8.60 to £10.00 an hour. This £1.40 increase will mean full-time younger workers eligible for the rate will see their pay boosted by £2,500 next year.
The government says this is the first step towards aligning the National Minimum Wage and National Living Wage to create a single adult wage rate.
The minimum hourly wage for an apprentice is also boosted next year, with an 18-year-old apprentice in an industry like construction seeing their minimum hourly pay increase by 18%, a pay rise from £6.40 to £7.55 an hour.
Ms Reeves said:
‘This government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.’
Internet link: HMRC press release
Employer NICs rise may have unforeseen consequences
The extra costs of the increase in employers’ NICs could cause businesses to respond in ways the government did not intend, the Chartered Institute of Taxation (CIOT) has warned.
At the Autumn Budget, Chancellor Rachel Reeves announced an increase to the rate of employer NICs by 1.2 percentage points, to 15% from 6 April 2025.
The CIOT says that the increase extends the differential in the burden of tax and NICs borne by those in employment compared to those engaged as self-employed.
The higher employers’ NICs goes, the greater the likelihood employers may seek ways to mitigate or absorb the burden, which could include potential alternative arrangements to taking on people as employees, adds the CIOT. Alternatives could include outsourcing or offshoring services and reducing the numbers of employees.
Eleanor Meredith, Chair of CIOT’s Employment Taxes Committee, said:
‘While employers must pay employer NICs on their employees’ earnings, no employer NICs is due where someone is genuinely self-employed.
‘We are concerned that the increase in employers’ NICs could lead to an increase in ‘false self-employment’, where businesses trying to save money turn to arrangements where the worker is not directly employed by them, without necessarily appreciating the rules and risks of such arrangements.
‘A worker’s employment status for tax is notoriously difficult to judge, as we have seen from recent complex litigation involving some TV presenters. HMRC will need to be sufficiently resourced to tackle potential increases in ‘false self-employment’.’
Internet link: CIOT website
Under 100 days to go until self assessment deadline
HMRC has warned taxpayers that the countdown to the self assessment deadline is now underway, with less than 100 days to go.
Self assessment taxpayers must file and pay their self assessment tax return before the 31 January 2025 deadline.
The tax authority says more than 12 million people need to file a tax return for the 2023/24 tax year and pay any tax owed by the deadline.
Over 3.5 million taxpayers have already beaten the clock and submitted their returns, it adds.
HMRC is reminding others that starting their self assessment early means they are more likely to complete an accurate tax return, avoid any last-minute panic plus they will know what they owe sooner and can budget.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
‘The countdown to the self assessment deadline has begun but there is still time to thoroughly prepare and file an accurate tax return by 31 January. You can access online help and support to help you file.’
Internet link: HMRC press release
Over £570 million stolen by fraudsters in first half of 2024
Criminals stole more than £570 million through authorised and unauthorised fraud in the first half of this year, according to data published by UK Finance.
72% of authorised push payment fraud began online and 16% started via telecommunications.
Losses due to unauthorised transactions across payment cards, remote banking and cheques were £358 million in the first half of this year, an increase of 5%.
The data also showed that banks prevented £710.9 million of unauthorised fraud using advanced security systems.
Ben Donaldson, Managing Director of Economic Crime at UK Finance, said:
‘Fraud continues to pose a major threat in this country with over £570 million stolen through payment fraud in the first half of the year. In addition to the financial impact, this crime can cause severe psychological harm to victims.
‘This isn’t a fight we will win alone as our data again shows that most fraud originates online and via telecommunications networks. There have been some improvements made by other sectors, but their actions don’t yet fully match the scale of the problem – more needs to be done to prevent fraudsters exploiting these platforms and networks.’
Internet link: UK Finance website
HMRC warns landlords to disclose earnings
HMRC has warned landlords to disclose their earnings on self assessment tax returns.
The tax authority has clarified the guidance on who can participate in the Let Property Campaign, which is targeted at landlords who owe tax through letting out residential property in the UK or abroad.
Landlords can report previously undisclosed taxes on rental income to HMRC under the Let Property Campaign if they are an individual landlord renting out residential property.
The campaign covers landlords who rent out single or multiple properties, rent out a room in their main home that exceeds the Rent a Room Scheme threshold and holiday lettings.
It is also important to note that, for those living abroad or intending to live abroad for more than six months and renting out a property in the UK, those earnings may still be liable to UK taxes.
Tax must be paid on any profit made from renting out property. The profit is calculated based on the amount left once claims for expenses or allowances have been deducted.
HMRC warned:
‘If you’re a landlord and have undisclosed income, you must tell HMRC about any unpaid tax now. You’ll then have 90 days to work out and pay what you owe. If you do not do this now, and HMRC finds out later, you could get higher penalties or face criminal prosecution.’
Internet link: GOV.UK
Business frustrated at halt in rollout of digital trade platform
Import and export businesses are frustrated by the government’s decision to pause work on the digital trade platform, according to the Institute of Directors (IoD).
When fully operational, the Single Trade Window will provide a gateway between businesses and UK border processes and systems, allowing users to meet their import, export and transit obligations by submitting information once and in one place.
However, the government now says that in the context of financial challenges, it is pausing delivery of the UK Single Trade Window in 2025/26.
Emma Rowland, Trade Policy Advisor at the IoD, said:
‘It is frustrating to see the government’s decision to halt the development of the Single Trade Window due to financial constraints following the Budget, particularly given extensive industry engagement and the project’s proximity to completion.
‘According to our own data, paperwork remains the largest obstacle for organisations involved in international exports. The Single Trade Window, designed to streamline border processes through a unified platform, has the potential to significantly ease this administrative burden on firms, making importing and exporting more efficient. Additionally, it could enhance data collection to better monitor and understand UK trade flows.
‘We urge the government to prioritise the Single Trade Window in the upcoming Spring Spending Review to facilitate trade for all UK companies.’
Internet link: IoD website
Almost half of UK adults have not written a will
Nearly half UK of adults have not written a will, nor are they currently in the process of doing so, according to research published by life insurer Canada Life.
Over a quarter said they do not have enough assets or wealth to warrant making a will, closely followed by 20% who believe they still have plenty of time to make one.
Additionally, the research found that 15% do not want to pay to write a will, while 14% believe their loved ones will inherit their assets automatically.
Stacey Love, Tax and Estate Planning Specialist at Canada Life, said:
‘Passing away without a will in place can place a significant burden on our loved ones. However, our research highlights that, up and down the country, people are not planning ahead or having conversations about the future.
‘No matter your age, writing a will should be a priority, even if you don’t think you have any real wealth to pass on. It’s also very important to have open, honest conversations with your loved ones about your inheritance plans, so they know what to expect.
‘Once your will is written, remember to review it every few years to make sure it remains accurate. Family circumstances can change over time, and so your will needs to reflect this.’
Internet link: Canada Life website
Permanent business rate cut for high street on the way
The government has published draft legislation to permanently cut business rates for retail, hospitality and leisure properties from 2026.
The tax cut will be funded by a tax rise for the very largest business properties, such as online sales warehouses, the government added.
Until then, 250,000 retail, hospitality and leisure (RHL) properties will receive 40% relief off their business rates bills up to £110,000 per business to help smooth the transition to the new system.
This support is alongside the Budget announcement to freeze the small business multiplier, together with Small Business Rates Relief protecting over a million properties.
James Murray, Exchequer Secretary to the Treasury, said:
‘For too long the business rates system has been working against our high streets.
‘[This] is a major step towards our new system that will support retail, hospitality and leisure businesses on our high streets to succeed.
‘This Bill paves the way for a permanent cut to their tax rate, helping to level the playing field between them and online and out-of-town businesses.’
Internet link: GOV.UK
More than 400,000 student loan customers use digital refund service
Over 400,000 customers have now used the Student Loan Company’s (SLC) digital refund service.
The SLC introduced a new service into the online account for repayment customers in May 2024 and has released data on the first six months of operation.
The SLC says its simple, digital service is an easy way for customers to self-serve, requesting a Below Threshold Refund, which is then paid directly into their bank account.
Under the repayment regulations, there are four refund scenarios, which the publication covers. These are ‘below threshold refunds’, ‘over-repayment refunds’, ‘early repayment refunds’ and ‘wrong plan type refunds’.
Steven Darling, Customer Experience Director at the SLC, said:
‘At the SLC, we want to provide the best possible customer experience, and from the feedback we receive from customers, they want to be able to self-serve in their online account.
‘With a below threshold refund being the most common reason why a customer might be eligible for a refund, we’ve made it quick and easy to request a refund through the online account. The figures in our latest report demonstrate the value of these improvements, with £61.6 million being paid to 248,000 customers since May 2024.
‘I would encourage customers to keep their contact and bank details up to date in their online account to ensure they don’t miss any key communication regarding refunds.’
Internet link: GOV.UK
Pension reforms ‘must unlock growth’
Pension reforms announced by Chancellor Rachel Reeves must unlock growth, according to the British Chambers of Commerce (BCC).
Pension megafunds will be created as part of the biggest set of pension reforms in decades. The government says this will unlock billions of pounds of investment in exciting new businesses and infrastructure and local projects.
The reforms, which will be introduced through a new Pension Schemes Bill next year, will create megafunds through consolidating defined contribution schemes and pooling assets from the 86 separate Local Government Pension Scheme authorities.
These megafunds mirror set-ups in Australia and Canada, where pension funds take advantage of size to invest in assets that have higher growth potential, which could deliver around £80 billion in investment in exciting new businesses and critical infrastructure while boosting defined contribution savers’ pension pots.
Shevaun Haviland, Director General at the BCC, said:
‘Increased investment in the UK economy is crucial if businesses are to deliver the growth we all want to see.
‘And with firms facing into a wall of fresh costs after a tough Budget, it is important that the Chancellor looks at the options to unlock more funding.
‘UK pensions can be a crucial component in doing that. They can generate billions for investment in infrastructure projects and the businesses of the future.’
Internet link: BCC website
