Autumn Budget 2024: Key Changes for NI Business Owners
This year’s Autumn Budget brings a host of updates across tax, employment, business, and property, many of which will have specific impacts for businesses, business owners and those with significant agricultural assets in Northern Ireland.
Below is a breakdown of the most relevant developments, effective dates, and potential implications.
Northern Ireland Funding and City Deals
Northern Ireland will receive an additional £640 million this financial year, followed by £1.5 billion next year. Although the specific allocation of this funding is devolved to the Northern Ireland Executive, with £270 million of the £1.5 billion being for capital investment these additional monies could influence Northern Ireland’s strategic projects, depending on the Executive’s priorities. Further, the government reiterated its commitment to city and growth deals, with £600 million in central government funding across four regional regeneration deals: the Belfast City region, Derry City and Strabane, Mid-South West region, and Causeway Coast and Glens. Together, these projects represent over £1.5 billion in investment potential for Northern Ireland.
Inheritance Tax (IHT) Changes
Some of the most significant changes for business owners are reforms announced by the government to IHT bringing pensions and trading businesses into the scope of IHT:
- Residence-Based IHT: From April 2025, IHT will become residence-based, impacting taxpayers based on residence rather than domicile status.
- Nil-Rate Bands Frozen: The IHT nil-rate band of £325,000 and the residence nil-rate band will remain frozen until 2030.
- Inherited Pensions: Starting April 2027, inherited pensions will be within the scope of IHT, changing the long-standing position.
- Business/Agricultural Property Relief Caps: From April 2026, combined business/agricultural property assets exceeding £1 million will qualify for only 50% relief, while assets below this cap will continue to benefit from 100% relief. Additionally, Business Property Relief for AIM shares will be reduced to 50%.
These changes may influence succession planning, particularly for business owners and families who rely on business (and agricultural) assets for tax efficiency.
Capital Gains Tax (CGT) Increases
The Chancellor announced CGT rate increases effective 30 October 2024:
- For individuals: The lower rate increases from 10% to 18%, while the higher rate rises from 20% to 24%.
- Trustees and personal representatives: CGT rises from 20% to 24%.
- Residential property: Rates remain unchanged at 18% (lower) and 24% (higher).
In addition, Business Asset Disposal Relief (BADR) and Investor’s Relief (IR) will see rate increases: the CGT rate for these reliefs remains at 10% for now but will rise to 14% in April 2025 and 18% from April 2026.
While these changes relate to disposals on or after 30 October 2024, there are special provisions for contracts entered in to before that date.
Employer’s National Insurance Contributions (NIC)
Effective 6 April 2025, several NIC changes will impact employers:
- Secondary Earnings Threshold: The earnings threshold for employer NIC will decrease from £9,100 to £5,000 and will rise with the Consumer Price Index starting April 2028.
- Employment Allowance Increase: This will double to £10,500 from April 2025, with the qualifying limit for relief based on employer NIC removed.
These changes may influence hiring costs for Northern Ireland employers and will require budgeting adjustments, especially as wage increases driven by National Living Wage and National Minimum Wage come into effect on 1 April 2025.
Corporation Tax Adjustments
Details on corporation tax were minimal, with the main announcement regarding continued alignment with the recent increases for larger businesses. No further changes were introduced for this fiscal period, providing a degree of predictability for planning.
Stamp Duty Land Tax (SDLT)
From and including 31 October 2024:
- the SDLT on additional dwellings such as second homes and buy-to-let investments will rise from 3% to 5% above the standard rates of SDLT otherwise payable: SDLT for companies and other non natural persons purchasing residential property increases to17%, up from 15%.
Similar to changes in the CGT rates mentioned above there are transitional rules for contracts entered in to before the effective date of change.
The Autumn Statement balances taxation changes, with increased spend by suggesting an emphasis on supporting infrastructure development through city deals and growth deals. While extra funding to the Northern Ireland Executive is a positive step, actual deployment will be subject to the decision of the Northern Ireland Executive.
For business owners, property investors, and families with estates to manage, strategic planning will be essential. Particularly in light of changes to inheritance and business property reliefs, the use of Trusts are likely to become more important vehicles for tax and inheritance planning. With many of these changes set to take effect in April 2025, business owners and investors will need to consider their hiring and investment strategies to maximize available reliefs.
For advice or information please contact Barry McDonough at: [email protected]
