Autumn Budget 2024 — Overview of tax legislation and rates (OOTLAR)-Personal Tax

Personal Tax
1.1 Income Tax charge and rate

The government will introduce legislation in Finance Bill 2024-25 to set the charge for Income Tax, and the corresponding rates, as it does every year.

Finance Bill 2024-25 will set the: 

main rates for tax year 2025 to 2026, which will apply to non-savings, non-dividend income of taxpayers in England, Wales, and Northern Ireland
savings rates for tax year 2025 to 2026, which will apply to savings income of all UK taxpayers
default rates for tax year 2025 to 2026, which will apply to non-savings, non-dividend income of taxpayers who are not subject to the main rates of Income Tax, Welsh rates of Income Tax or the Scottish rates of Income Tax

Income Tax rates and rate limits on non-savings and non-dividend income for Scottish taxpayers are set by the Scottish Parliament. The UK rates are reduced by 10 pence in £1 for Welsh taxpayers, and the Welsh rates of Income Tax for non-savings and non-dividend income are set by the Welsh Parliament, and added to the UK rates. 

1.2 Starting rate for savings

As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to retain the 0% band for the starting rate for savings income at its current value of £5,000 for tax year 2025 to 2026. This measure will apply to the whole of the UK. 

1.3 Changes to the taxation of non-UK domiciled individuals

As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25, abolishing the remittance basis of taxation for non-UK domiciled individuals and replacing it with a residence-based regime, which will take effect from 6 April 2025.

Individuals who opt into the regime will not pay UK tax on foreign income and gains (FIG) for the first 4 years of tax residence. From 6 April 2025, the government will introduce a new residence-based system for Inheritance Tax.

For Capital Gains Tax purposes, current and past remittance basis users will be able to rebase personally held foreign assets to 5 April 2017 on a disposal where certain conditions are met. Overseas Workday Relief will be retained and reformed, extending to a 4 year period and removing the need to keep the income offshore.

The amount claimed annually will be limited to the lower of £300,000 or 30% of the employee’s net employment income. 

The government is extending the Temporary Repatriation Facility to 3 years, expanding the scope to offshore structures, and simplifying the mixed fund rules to encourage individuals to spend and invest their FIG in the UK. 

A technical note has been published alongside Autumn Budget 2024.

The government is also publishing a call for evidence on the personal tax offshore anti-avoidance rules. This call for evidence seeks to understand and identify areas where the personal tax offshore anti-avoidance rules could be improved or updated.  

The tax information and impact note for this measure provides more information: Tax changes for non-UK domiciled individuals

1.4 Inheritance Tax nil-rate band and residence nil-rate band

As announced at Autumn Budget 2024, the Inheritance Tax nil-rate bands are already set at current levels until 5 April 2028, and the government will introduce legislation in Finance Bill 2024-25 to fix these levels for a further 2 years until 5 April 2030. The:

nil-rate band will continue at £325,000
residence nil-rate band will continue at £175,000
residence nil-rate band taper will continue to start at £2 million

Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability.

The tax information and impact note for this measure provides more information: Inheritance Tax nil-rate band and residence nil-rate bands from 6 April 2028

1.5 Reducing tax-free overseas transfers of tax-relieved UK pensions

As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to: 

remove the exclusion from the Overseas Transfer Charge (OTC) of transfers to Qualifying Recognised Overseas Pension Schemes (QROPS) established in the European Economic Area (EEA) and Gibraltar, where the member is resident in the UK or an EEA state — this will mean that pension transfers from tax relieved UK pensions to QROPS in the EEA and Gibraltar will now be subject to a 25% charge, unless another exclusion applies, bringing their treatment in line with transfers to QROPS established in the rest of the world — the measure will take effect from 30 October 2024
bring the conditions for a scheme to be an Overseas Pension Schemes (OPS) and Recognised Overseas Pension Schemes (ROPS) established in the EEA in line with those for OPS and ROPS established in the rest of the world, so that from 6 April 2025, OPS established in the EEA will be required to be regulated by a regulator of pension schemes in that country, and ROPS established in the EEA must be established in a country with which the UK has either a Double Tax Agreement which allows for exchange of information or a Tax Information Exchange Agreement
require scheme administrators of registered pension schemes to be UK resident from 6 April 2026

The tax information and impact note for this measure provides more information: Changes to rules for overseas pensions and scheme administrators

1.6 Clarification of taxable status of Statutory Neonatal Care Pay

As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to clarify the Income Tax treatment of the Statutory Neonatal Care Pay Scheme, which is part of the Employment Rights Bill.

Legislation in Finance Bill 2024-25 will confirm that Statutory Neonatal Care Pay is taxable as social security income. This measure will have effect on and after the date of Royal Assent to Finance Bill 2024-25.

The tax information and impact note for this measure provides more information: Tax treatment of Statutory Neonatal Care Pay: Income Tax

1.7 Employment Related Securities (ERS) changes — consequential to the Neonatal Care (Leave and Pay) Act 2023

As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to ensure that the notice an employer must provide to an employee under a Share Incentive Plan regarding the possible effect of deductions from salary on entitlement to social security benefits and statutory payments will also refer to Statutory Neonatal Care Pay. The changes will take effect from 6 April 2025.

The tax information and impact note for this measure provides more information: Share Incentive Plan — consequential change because of the Neonatal Care (Leave and Pay) Act 2023

1.8 Changes to the Capital Gains Tax (CGT) rates

As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to increase the main rates of Capital Gains Tax (CGT) from 10% and 20% to 18% and 24% respectively. The change will take effect for disposals made on or after 30 October 2024.   

 The rate of CGT for Business Asset Disposal Relief and Investors’ Relief is increasing to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026.   

 No changes will be made to the 18% and 24% rates of Capital Gains Tax that apply to residential property gains.   

 The tax information and impact note for this measure provides more detail: Changes to the rates of Capital Gains Tax

1.9 Capital Gains Tax — Investors’ Relief — reduction in the lifetime limit

As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 to reduce the Investors’ Relief lifetime limit from £10 million to £1 million for Investors’ Relief qualifying disposals made on or after 30 October 2024.   

The tax information and impact note for this measure provides more detail: Capital Gains Tax: Investors’ Relief — lifetime limit reduction

1.10 Carried interest taxation reform

As announced in July 2024, and as confirmed in Autumn Budget 2024, the government will reform the way carried interest is taxed, ensuring that this is in line with the economic characteristics of the reward.

From April 2026, the tax regime will be within the Income Tax framework, with a 72.5% multiplier applied to qualifying carried interest that is brought into charge.  As an interim step, the government will introduce legislation in Finance Bill 2024-25 to increase the 2 Capital Gains Tax rates for carried interest to 32% from 6 April 2025. 

The government published a summary of responses to the call for evidence from earlier this year. This publication includes a summary of responses to the call for evidence and outlines the next steps, including a consultation on introducing further conditions of access into the regime.

The tax information and impact note for this measure provides more information: Carried interest: rates of Capital Gains Tax

1.11 Alternative finance — Tax rules for alternative finance

As announced at Autumn Budget 2024, the government will introduce legislation in Finance Bill 2024-25 making changes to certain alternative finance tax rules for Capital Gains Tax, Corporation Tax, Income Tax and Annual Tax on Enveloped Dwellings.

These changes, which apply from 30 October 2024, will ensure that tax consequences are the same for those using alternative and conventional financing arrangements across the UK.  

This change follows a consultation on alternative refinancing arrangements. The summary of responses to the 2024 consultation was also published at Autumn Budget 2024.  

The tax information and impact notes for this measure provides more information on:

Changes to alternative finance tax rules (refinancing)  
Annual Tax on Enveloped Dwellings: changes to alternative finance rules
1.12 Taxation of Employee Ownership Trusts and Employee Benefits Trusts

As announced at Autumn Budget 2024, following a consultation, the government will introduce legislation in Finance Bill 2024-25 for a package of reforms to the taxation of Employee Ownership Trusts and Employee Benefit Trusts.

These reforms will ensure that the regimes remain focused on encouraging employee ownership and rewarding employees, and to prevent opportunities for abuse. The changes will take effect from 30 October 2024. 

The summary of responses to the 2023 consultation was also published at Autumn Budget 2024. 

The tax information and impact note for this measure provides more information: Changes to the taxation of Employee Ownership Trusts and Employee Benefit Trusts