Chancellor Rachel Reeves delivered Labour's first Budget on 30 October 2024 — the first Labour Budget in fourteen years and, on the Treasury's own figures, the largest single tax-raising event since 1993. The package was framed as restoring public finances and funding public service investment, and it landed with a strong impact on owner-managed businesses, employers, asset-holding families, and capital gains taxpayers.
For our SME and family business clients, the Budget reordered planning priorities overnight. Several measures were due to take effect from 6 April 2025, others from 6 April 2026 or 6 April 2027, creating a multi-year transition timetable that we have been working through with clients ever since.
Employer National Insurance rises sharply
The most material business measure was the increase in employer Class 1 NIC. The rate rose from 13.8% to 15% from 6 April 2025. Simultaneously, the secondary threshold — the point at which employer NIC begins to apply — was cut from £9,100 to £5,000 per year. The combined effect was a substantial increase in the cost of employing each member of staff, with the proportional impact heaviest on lower-paid employees because the threshold reduction matters more relative to their earnings.
To partially offset the impact on smaller employers, the Employment Allowance was raised from £5,000 to £10,500 from April 2025, and the £100,000 secondary Class 1 NIC eligibility threshold was removed entirely. The change widened the Employment Allowance to many more employers, including some single-director-employee companies that had previously been excluded under separate rules.
For our payroll and bookkeeping clients, the April 2025 transition required updated payroll software, updated employer cost models, and difficult conversations with several clients about whether the planned employer NIC rise could be absorbed or whether headcount, hours, or pricing needed to change. Our business advisory team produced bespoke employer cost models for every payroll client between November 2024 and March 2025.
Business Property Relief and Agricultural Property Relief capped
Business Property Relief (BPR) and Agricultural Property Relief (APR), historically available at 100% on qualifying business and agricultural assets for inheritance tax purposes with no upper limit, were to be capped at a combined £1 million per estate from 6 April 2026. Above the £1 million cap, the relief rate was to fall to 50%, producing an effective 20% inheritance tax rate on qualifying assets above the cap. Shares listed on AIM and other recognised growth markets were to lose the previous 100% rate entirely, moving to a 50% rate from 6 April 2026.
For family-owned trading businesses worth more than £1 million, the change was the most consequential inheritance tax announcement in a generation. Several of our family-business clients triggered immediate reviews of share ownership, lifetime gifting strategies, family investment company structures, and shareholder agreements. The effective date of 6 April 2026 created a substantial planning window, but the seven-year potentially exempt transfer rule meant that lifetime gifts made even immediately after the announcement would still be inside the seven-year cumulation period at the point the new rules took effect.
Business Asset Disposal Relief rates rise in stages
Business Asset Disposal Relief (BADR) — the relief that taxes qualifying business disposals at a reduced CGT rate — was to rise in two stages. The rate rose from 10% to 14% from 6 April 2025 and was to rise further from 14% to 18% from 6 April 2026. The lifetime limit of £1 million per individual was unchanged. Investor's Relief, applied at the same 10% rate, was given an aligned uplift but its lifetime limit was simultaneously cut from £10 million to £1 million.
For owner-managers approaching a planned exit in the 2024-25 or 2025-26 tax year, the announcement triggered immediate sequencing decisions. Several clients accelerated planned share sales into the 10% window. Others restructured to ensure that qualifying conditions — two-year ownership, 5% holding, employee or officer status — would be cleanly met before the 18% rate took effect.
CGT main rates aligned with residential rates
The main rates of capital gains tax — applying to gains on shares, business assets outside BADR, second properties (other than residential), and other chargeable assets — were raised from 10%/20% to 18%/24% with immediate effect from 30 October 2024. This brought the main rates into alignment with the existing rates on residential property gains. The annual exempt amount remained at £3,000.
For director-shareholders contemplating share sales, the immediate uplift removed the option of waiting to plan. Disposals already in progress on 30 October 2024 had to be analysed for unconditional contract dates to determine whether the old or new rates applied.
Stamp Duty Land Tax — additional rate to 5%
The 3% Stamp Duty Land Tax surcharge on additional dwellings was increased to 5% with effect from 31 October 2024. For buy-to-let investors and clients building rental portfolios, the change added two percentage points of upfront cost to every purchase. We re-ran investment return models for several portfolio landlord clients in the weeks following the announcement.
Inheritance tax and pensions
Pension pots were to be brought within the scope of inheritance tax from 6 April 2027. For decades, undrawn defined contribution pension pots had passed outside the estate at death — a legitimate planning route that had become increasingly important after the Lifetime Allowance abolition. The 2027 change removed that route and triggered a wave of pension drawdown and lifetime gifting conversations across our higher-earning client base.
Non-dom regime — replaced
The Conservative-announced abolition of the resident non-domiciled regime was confirmed and extended. The four-year foreign income and gains regime took effect from 6 April 2025. The inheritance tax residence test was set with detailed rules, generally applying after ten years of UK residence and requiring ten years of non-residence to leave the inheritance tax net. The Temporary Repatriation Facility was extended and the rate band structure modified.
For our Canary Wharf and Dubai client base, the confirmation of the abolition required final decisions on UK residency status from 2025-26 onward. Our tax planning team has worked through individualised analyses for every affected client.
The verdict
The Autumn Budget of 30 October 2024 marked a structural shift in the UK tax landscape. The combination of higher employer NIC, BPR cap, BADR uplifts, aligned CGT rates, the SDLT surcharge increase, and pensions in the IHT net produced a coherent package aimed at owners of family businesses, asset-holding families, and employers of any meaningful scale. For SMEs, the most important conclusion was that planning windows had become asymmetric — most of the new rates apply from April 2025 or April 2026, and the gap between announcement and effect needs to be used.
If you have not yet reviewed your position in light of the 30 October 2024 Budget, book a planning call with our team.