Yesterday the Chancellor, Rachel Reeves, held The Budget. Unfortunately there were tax increases of £40bn announced. This was the greatest increase in taxes since 1993.
Interest on unpaid/late tax
This is to increase by 1.5%, to a new rate of the bank rate + 4%. In addition there are to be 1,800 additional debt collection officers appointed.
Fuel duty
This is to remain the same for another year, to March 2026.
However, with the increasing use of electric cars there is likely to be a change in the future for the taxes on ‘fuel’ – perhaps to road pricing.
Stamp duty on second homes/buy to let
This has been increased from 3% to 5% from 31st October 2024.
Non domicile changes
The current system is to end from April 2025.
Capital Gains Tax increases
The rates that are paid on the sale of shares/etc. have increased significantly.
Basic rate tax payers used to pay 10% but this has now increased to 18%.
Higher rate taxpayers used to pay 20% but this has increased to 24%.
The annual allowance, below which gains are tax-free, remains at £3,000. Gains on residential properties remain the same as before at 18% and 24%.
Tax rate bands/thresholds
These will remain frozen until April 2028 when they are expected to increase annually in line with inflation as used to be the case.
The mileage rate for business travel
Unfortunately this has been frozen since 2011 with no changes announced.
The costs of motoring have increased significantly since then, however the rates per mile remain frozen.
Current rates are still 45p/mile on the first 10,000 miles per year and 25p/mile afterwards and have been the same since 2011.
Employers National Insurance
There were two changes announced:
Firstly, the rate that is paid is to rise to 15% from 6th April 2025.
Secondly, the threshold at which Employers National Insurance is paid has been reduced from £9,100 to £5,000.
State Pension increase
From 6th April 2025 the rate is to increase by 4.1%. With the frozen personal allowance, the state pension is expected to rise above the personal allowance in future.
Road tax increase
The first year’s road tax on new cars is to increase for many vehicles.
ISA limits
The savings limit has not increased with inflation, it remains at £20,000 per year.
Future Budgets
It was announced that the Spring Statements will be for information only. Any tax changes will only be announced in the Autumn budgets going forwards.
Making Tax Digital – quarterly tax returns
Despite initially intending to abolish this, it was announced that the scope is actually to expand.
At present people who receive gross total income from self-employment or rental properties above £50,000pa will be required to complete quarterly tax returns from April 2026.
Those with income above £30,000 are to start from 6th April 2027.
Unfortunately, now those with income above £20,000 are to also start from a date after this.
When the start date occurs from April 2026, it becomes a complex year as both the return for the previous year has to be completed, as well as the first quarterly return for the next year, must be completed at the same time. In effect, two tax returns are being completed at once.
Going forwards, there are 4 quarterly returns plus one final tax return after the end of the tax year to be completed for people that fall within MTD.
HMRC staff
It was announced that an additional 5,000 staff are to be recruited by HMRC. With waiting times on the phone regularly being over half an hour, and long postal delays, this will be welcome.
Child benefit repayments
The previous government had planned to base the level at which it has to start to be repaid on household income rather than as presently which is based on individual income. Unfortunately, this was cancelled and the existing rules are to remain.
If you have any queries regarding these Budget announcements, please do get in touch – there is no charge for the initial short email consultation.
