Dear PAYadvice.UK

Yesterday [Wednesday 30th October 2024], the Chancellor of the Exchequer, the Rt Hon Rachel Reeves MP, made her Autumn Budget speech and set out the government’s fiscal plans.

This [communication] provides you with information on the key measures announced in the Autumn Budget 2024 that will be relevant to you as an agent.

Tax related documents, which include tax information and impact notes, consultations and calls for evidence can be found on GOV.‌‌‌UK. An overview of all the tax legislation and rates announced yesterday has also been published.  

This… includes information on measures that will directly affect you as an agent as well as information that might be useful for your clients or that you may receive enquiries about.

Information on measures that may affect you as an agent

Raising standards in the tax advice market

The government is responding to the recent consultation on raising standards in the tax advice market by: 

• modernising HMRC’s tax adviser registration services and mandating registration of tax advisers interacting with HMRC from April‌‌‌ 2026
• consulting on enhanced powers and sanctions for HMRC to act against tax advisers who facilitate taxpayer non-compliance. The consultation will be published in early 2025
• introducing a new requirement, from 6 April‌‌‌ 2025, for tax advisers to obtain an advanced electronic signature from their clients if they wish to continue to use the nominations process for certain income tax repayments. This will give greater assurance that an adviser has permission to act for a taxpayer. Further information is available on GOV‌‌‌.UK
• considering options to strengthen the broader regulatory framework in the tax advice market

Taken together, these are significant steps towards modernising HMRC’s services for tax advisers and ensuring advisers meet minimum standards of behaviour.

Consultation on new ways to tackle non-compliance

The government has published a consultation on reforming HMRC’s correction powers, exploring changes to HMRC’s existing powers and processes, and a potential new power to require taxpayers to correct mistakes themselves.

Information on measures that may affect your clients

Reforming the taxation of non-UK domiciled individuals

From 6‌‌‌ April‌‌‌ 2025, the current rules for the taxation of non-UK domiciled individuals will end. The government will implement a new residence-based regime.

Tackling non-compliance in the umbrella company market

From April‌‌‌ 2026, recruitment agencies that use umbrella companies within their labour supply chains will be legally responsible for accounting for PAYE on workers’ pay. If there is no agency in a labour supply chain, this responsibility will be placed on the end client. Further detail is set out in this policy paper.

Capital Gains Tax

The government will increase the lower and higher main rates of Capital Gains Tax to 18% and 24% respectively for disposals made on or after 30‌‌‌ October 2024. These new rates will match the residential property tax rates, which are not changing.

The government will also reform the way carried interest is taxed, ensuring that this is in line with the economic characteristics of the reward.

Inheritance Tax 

Agricultural property relief and business property relief

The government will reform these reliefs from 6‌‌‌ April‌‌‌ 2026. The existing 100% rates of relief will continue for the first £1 million of combined agricultural and business property to help protect family businesses and farms. It will be 50% thereafter, and in all circumstances for shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as the Alternative Investment Market (AIM). A policy summary note has been published on this measure.

Environmental Land Management

The government confirmed that it will extend the existing scope of Agricultural Property Relief, from 6‌‌‌ April‌‌‌ 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, devolved governments, public bodies, local authorities, or approved responsible bodies.

Inheritance Tax and pensions

The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6‌‌‌ April 2027. As part of these changes, pension scheme administrators will become liable for reporting and paying any inheritance tax due on unused pension funds and death benefits. A technical consultation has been published on this measure.

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

The inheritance tax nil-rate bands are already set at current levels until April 2028, and will stay fixed at these levels for a further 2 years until April 2030.

Inheritance Tax digitalisation

The government will digitalise the inheritance tax service, from 2027 to 2028, to provide a modern, easy-to-use system, making returns and paying tax simpler and quicker.

National Insurance Contributions

The government is increasing the rate of employer National Insurance contributions (NICs) from 13.8% to 15% and reducing the per-employee threshold at which employers become liable to pay National Insurance (the Secondary Threshold) from 6‌‌‌ April‌‌‌ 2025 to £5,000.  

Reporting and paying Income Tax and Class 1A NICs on benefits in kind in real-time

The government will proceed to mandate the reporting of Income Tax and Class 1A National Insurance Contributions (NICs) for most benefits in kind (BiKs) in real time. This will mean that for most BiKs, Income Tax and Class 1A NICs will need to be reported to HMRC via PAYE through Real Time Information (RTI) from April‌‌‌ 2026. Further detail is set out in a technical note.

Making Tax Digital

The government is committed to delivering Making Tax Digital (MTD) for Income Tax, with self-employed individuals and landlords with income over £50,000 joining from April‌‌‌ 2026, and those with income over £30,000 joining from April‌‌‌ 2027. Yesterday, the government also announced that, by the end of this Parliament, it will expand rollout to those with income over £20,000. Timing for this will be confirmed at a future fiscal event.  

Offshore tax compliance

HMRC plans to expand resource focussed on addressing wealthy individuals who use complex structures to avoid or evade tax. This will deliver a more coordinated and targeted approach to those who deliberately seek to evade paying tax due in the UK.

Double cab pick-ups

HMRC will not legislate to maintain the current treatment of double cab pick-ups with a payload of one tonne or more as goods vehicles for capital allowances, benefit in kind and some deductions from business profits. The amended guidance clarifies this change of approach and how it is to be implemented, including transitional arrangements.

Ending contrived Car Ownership Schemes

Reforms to Employee Car Ownership Schemes (ECOS) to close a loophole by which these arrangements are used by employers as a method of circumventing the Company Car Tax liability of the employee and their own employer NICs liability. 

Reducing tax-free overseas transfers of UK tax relieved pension

Preventing some wealthy individuals transferring parts of their pensions outside of the UK to take advantage of tax-free allowances both in the UK and abroad.

VAT on private school fees

From 1‌‌‌ January 2025, to secure additional funding to help deliver the government’s commitments relating to education and young people, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20%. This will also apply to boarding services closely connected to education and vocational training provided by private schools. The government has published a response to its technical consultation on this policy. To protect pupils with special educational needs that can only be met in a private school, local authorities and devolved governments that fund these places will be compensated for the VAT they are charged on those pupils’ fees.

Carbon border adjustment mechanism (CBAM)

The government has published its response to the consultation on the introduction of a UK CBAM. The response confirms that the UK CBAM will be introduced on 1‌‌‌ January‌‌‌ 2027. It will place a carbon price on goods that are at risk of carbon leakage imported to the UK from the aluminium, cement, fertiliser, hydrogen, iron and steel sectors to ensure UK decarbonisation efforts lead to a true reduction in global emissions. Products from the glass and ceramics sectors will not be in scope of the UK CBAM from 2027 as previously proposed. The response confirms further detail about the policy design and outlines next steps for the implementation of the UK CBAM.

Taxation of Employee Ownership Trusts and Employee Benefit Trusts

The government is introducing reforms to the taxation of Employee Ownership Trusts and Employee Benefit Trusts to prevent opportunities for abuse, ensuring that regimes remain focused on encouraging employee ownership and rewarding employees. These changes follow a consultation held in 2023 – the summary of responses was also published at Autumn Budget 2024. Further detail is set out in this policy paper.

Simplification of Taxation of Offshore Interest

UK taxpayers are taxed on offshore interest arising in a tax year ending on 5 April, but International Automatic Exchange of Information data on investment income is received for a calendar year, so there is a timing mismatch. Feedback to this new consultation will inform future work on proposals to overcome this mismatch and simplify the taxation of offshore interest.  

You can find more information on these and other measures on the Autumn Budget 2024 page on GOV‌‌‌.UK.

Consultations and Calls for evidence 

Following the Budget speech yesterday a number of new consultations and calls for evidence were published on GOV‌‌‌.UK. These include:

• tackling the Hidden Economy by expanding Tax Conditionality to New Sectors (Consultation)
• consultation on new ways to tackle non-compliance (Consultation)
• call for evidence on offshore anti-avoidance rules (Call for evidence)
• simplification of Taxation of Offshore Interest (Call for evidence) 

The government also announced it will bring forward a package of measures to simplify tax administration and improve the customer experience in spring 2025 and will meet stakeholders to understand the priorities for administration and simplification.

Yours faithfully
HM Revenue and Customs  

PAYadvice.UK 31/10/2024