In this post we have outlined a few tax planning options that readers may want to consider following the October Budget changes.
- Capital Gains Tax
Landlords will be relieved that the higher residential rate will remain at 24% until at least 5 April 2026. However, where a landlord is planning to sell, it may be prudent to do so while the 24% rate remains available, as beyond April 2026 nothing is guaranteed.
- Business Asset Disposal Relief
The present 10% rate of CGT chargeable on qualifying business assets is increasing April 2025 to 14% and to 18% from April 2026.
Accordingly, where the qualifying conditions are met, and a disposal is on the cards, it makes sense to make the disposal prior to 6 April 2025 – saving up to 14% where the higher rate would otherwise apply.
Landlords with furnished holiday lettings who meet the conditions can also benefit if they dispose of their property within three years from the end of their FHL business. Again, making the disposal sooner rather than later will maximise the impact of BADR. The savings where the gain would otherwise be taxed at the higher rate fall to 10% from April 2025 and to 6% from April 2026.
- Employers’ NIC increase
The upper secondary thresholds for under 21s, apprentices, armed forces veterans and new Freeport employers remain unchanged, and employers looking to mitigate their NIC increases (from 13.8% to 15% from April 2025) could consider taking on workers within these groups.
Taking on two part-time workers rather than one full-time worker will also reduce their NIC bill.
The Class 1A rate and Class 1B rate, which are aligned with the secondary Class 1 rate, also rise to 15% from 6 April 2025. This means that the Class 1A contributions payable on chargeable benefits in kind will increase from 13.8% to 15%.
These employer NIC cost increases will be significant for larger employers and may warrant a recalculation of budgets for the coming year.
If you need more information regarding any of the budget changes or the above planning options please call so we can consider your options.