The Government is looking to raise £40bn in additional tax…to put that in context, the total UK tax collected in 2023/24 was £829bn. This is a significant target – how will it be achieved?

We have prepared this summary of the 2024 budget with the best interests of our clients in mind – small businesses and individuals in Scotland. 

We hope you find it helpful. If any matter is relevant to you now or in the future, please get in touch.

First, some changes:

  1. Capital Gains Tax – Rates are increasing, with immediate effect (from 30 October 2024). The lower rate will rise from 10% to 18% and the higher rate from 20% to 24%, bringing these in line with the current rates that apply on the sale of residential property. For business owners – the rate applied under Business Asset Disposal Relief (BADR) will increase gradually, remaining at 10% up until 5 April 2025, rising to 14% from 6 April 2025, and then to 18% in April 2026.
  1. Employer’s National Insurance – Increasing to 15% over a much lower threshold of £5,000 for employers. Slightly offset by an increase to the Employment Allowance to £10,500 and removal of the ceiling meaning all employers are eligible. Personal service companies – we understand sole-director payrolls are, sadly, still not eligible.
  1. Minimum Wage – The minimum wage will be increased to £12.21. This is short of the UK Real Living Wage of £12.60 but the gap has narrowed.
  1. Benefit in Kind (BIK) – Many double-cap pickups (DCPUs) will now be treated as Cars (rather than Vans), basically to raise more BIK tax. Electric car BIK rate will continue to rise by 1 percentage point per year (2% in 2024/25 and 5% by 2027/28). However, from April 2028, the electric company car rate will increase from 5% to 7% and then to 9% in 2029/30. Hybrid vehicles will continue on the same trend; from April 2028, the rate will be 18% for all hybrid company cars regardless of electric mileage range, and 19% from April 2029. (Note: that’s the same as the current rate for an ICE car producing 70-74g/km CO2)

Now, some things which won’t (immediately) change:

  1. Corporation Tax – Rates, small profits threshold, marginal relief, full expensing – all remain as they are.
  1. Income Tax – No change for the next couple of years. From 2028/29, income tax thresholds will start to increase in line with inflation following the freeze announced by the previous Government. Stay tuned for the Scottish budget on this point…
  1. Creative Industry Tax Reliefs – No indication that there will be any change to these in the 2024 Budget.

And finally, some wider changes we found interesting:

  1. VAT on Private School Fees – From 1 January 2025, private schools will be required to charge VAT on their fees for day and boarding pupils. To prevent gaming of the system, fees paid in advance from 29 July 2024 will be included.
  1. Investment in HMRC – 6,800 new staff – including 1,800 for debt recovery – will be target-driven in the context of the Government’s significant tax collection aims. 1.5% will be added to the existing rate for late paid tax (now 4% plus base rate)
  1. Hydrogen in East Ren? – the chancellor announced/confirmed plans for a green hydrogen project in East Renfrewshire, one of 11 new projects and part of the ‘Warm Homes Plan’. This is funded by an initial £3.4bn over the next three years to transform 350,000 homes, including a quarter-of-a-million low-income and social homes.

Disclaimer! This is not a complete guide to the Budget and should not be relied on as detailed or individualised tax advice.