News & Insights

The latest tax developments and VAT round-up for the month.

Silverthrone tax digest covers the developments most likely to affect individuals, trusts, estates and businesses. If you would like to discuss anything here in more detail, please get in touch with your usual contact.

1. Private client

1.1 Capital gains tax rates rise from Budget day

The Autumn Budget on 30 October 2024 raised the main rates of capital gains tax with immediate effect and set out further increases for business owners.

For disposals on or after 30 October 2024, the main rates rose from 10% and 20% to 18% and 24%, the same as the rates already charged on residential property, and trustees and personal representatives now pay 24%. The rate for business asset disposal relief and investors’ relief stays at 10% until 5 April 2025, then rises to 14% and to 18% from 6 April 2026, while the lifetime limit for investors’ relief falls from £10 million to £1 million. If you are thinking of selling a business, shares or a second property, please talk to us about timing before you exchange contracts, and remember that gains made in 2023/24 belong on the return due on paper by 31 October 2024 or online by 31 January 2025.

1.2 Inheritance tax reaches pensions, farms and family businesses

Unused pension funds will come within inheritance tax from April 2027, and relief for agricultural and business property will be capped from April 2026.

Most unused pension funds and pension death benefits will form part of the estate for deaths on or after 6 April 2027. From 6 April 2026, 100% agricultural and business property relief was to apply only to the first £1 million of combined qualifying property, with 50% relief above that, while relief on AIM shares falls to 50%; tax on these assets can be paid in ten interest-free annual instalments. The nil-rate band and residence nil-rate band stay frozen until April 2030, so now is a good time to review your will and your pension nominations. Please note that on 23 December 2025 the government raised the £1 million allowance to £2.5 million, transferable between spouses and civil partners, and it has since confirmed that personal representatives, not pension schemes, will report and pay the tax on pensions and that death-in-service benefits are excluded.

1.3 Non-dom rules replaced by a residence test

The remittance basis for non-UK domiciled individuals ends on 5 April 2025 and will be replaced by a regime based on residence.

From 6 April 2025, people who come to the UK after ten consecutive years of non-residence can claim full relief on foreign income and gains for their first four years of UK residence. Former remittance basis users can bring foreign income and gains from before April 2025 into the UK at a reduced rate of 12% in 2025/26 and 2026/27 and 15% in 2027/28. For inheritance tax, domicile is replaced by a test of long-term residence, generally ten of the previous twenty tax years, which also changes the position of many non-UK trusts. If you or your family have international connections, please ask us to review your position before April 2025.

1.4 Serviced offices were an investment business

The First-tier Tribunal has refused business property relief on shares in a company running serviced offices, finding that its business was mainly holding investments.

The estate held shares in a company that let four floors of a London building as serviced offices, with reception, cleaning and IT support included in the charges. The tribunal accepted that real services were provided but found they were largely the kind of management a landlord carries out, so the company’s business was mainly holding investments and relief was denied. Owners of property-based companies should not assume their shares will qualify for relief and may wish to review the position with us. Please note that the Upper Tribunal dismissed the executors’ appeal on 29 July 2026, confirming that no relief was due.

The Executors of Keith Denis Lewis Beresford (Deceased) v HMRC [2024] UKFTT 952 (TC)

2. PAYE and employment

2.1 Employer National Insurance rises to 15%

From 6 April 2025, employers will pay National Insurance at 15% on earnings above a much lower threshold of £5,000 a year.

The rate of secondary Class 1 contributions rises from 13.8% to 15%, and the threshold at which employers start to pay falls from £9,100 to £5,000 until April 2028. To soften the impact on smaller businesses, the Employment Allowance rises from £5,000 to £10,500 and the rule excluding employers with a liability of £100,000 or more is removed. Employers should update their payroll budgets for 2025/26 now and consider whether salary sacrifice or a different mix of salary and dividends makes sense.

2.2 National Living Wage rises to £12.21

The National Living Wage for workers aged 21 and over will rise from £11.44 to £12.21 an hour from 1 April 2025.

The rate for 18 to 20 year olds increases from £8.60 to £10.00 an hour, and the rate for under-18s and apprentices from £6.40 to £7.55. Employers should check that every worker will be paid at least the new rate from the first pay period starting on or after 1 April 2025, including workers whose salary sacrifice or other deductions could take their pay below the minimum.

2.3 Evidence now needed for work expense claims

Since 14 October 2024, employees claiming tax relief on work expenses outside Self Assessment must use form P87 and send supporting evidence.

HMRC now asks for documents such as receipts before it processes a PAYE claim for employment expenses, and the evidence has to be sent by post. Claims made on a Self Assessment return are not affected by the change. Employees should keep records of any expenses they plan to claim and speak to us if they are unsure whether a cost qualifies.

3. Business tax

3.1 Corporation tax roadmap keeps rates steady

Alongside the Budget, the government published a corporate tax roadmap committing to keep the main rate of corporation tax at 25% for the rest of this Parliament.

The 19% small profits rate and marginal relief, full expensing for qualifying plant and machinery and the £1 million annual investment allowance are all being kept, as are the current rates of research and development relief. The aim is to give businesses more certainty when they plan investment. Owner-managers should still weigh these stable company rates against the higher employer National Insurance and capital gains tax costs announced on the same day.

3.2 Tighter rules for employee ownership trusts

From 30 October 2024, new conditions apply when owners sell a controlling stake in their company to an employee ownership trust.

Former owners and people connected with them can no longer control the trust after the sale, the trustees must be UK resident, and the trustees must take reasonable steps to make sure they pay no more than market value for the shares. The period in which a breach of the conditions can withdraw the seller’s capital gains tax relief now runs to the end of the fourth tax year after the sale. If you are considering an employee ownership trust as your exit route, please speak to us early.

3.3 Exit charge on trustees leaving the UK can be paid over time

The Upper Tribunal has held that the exit charge on trustees who moved the trust abroad was compatible with EU law once the legislation is read as allowing payment to be deferred.

The trustees became resident in Cyprus in 2004, which triggered a capital gains tax charge on gains that had built up but had not been realised, and a related appeal concerned a company that moved its management to the Netherlands. EU law allowed an exit charge but not one that had to be paid straight away, so the tribunal read the legislation as allowing deferred payment rather than setting the charge aside. Trustees and companies thinking of moving abroad should take advice early, because the move itself can trigger tax without any sale. Please note that the Court of Appeal dismissed the further appeals on 12 June 2026, confirming that the charge stands but can be paid in five equal annual instalments.

Trustees of the Panico Panayi Accumulation and Maintenance Settlements Nos 1 to 4 and another v HMRC [2024] UKUT 319 (TCC)

3.4 Late payment interest to rise

From 6 April 2025, the interest HMRC charges on late-paid tax will rise to 4% above the Bank of England base rate.

The margin is currently 2.5% above base rate, so HMRC’s late payment interest rate stood at 7.5% throughout October 2024. The increase will apply to unpaid tax across the main taxes, including income tax, corporation tax and VAT. If you are finding it hard to pay, contacting HMRC early about a Time to Pay arrangement will help to limit interest and penalties.

4. VAT and indirect taxes

4.1 VAT on private school fees from January 2025

The Budget confirmed that private school fees will be subject to VAT at 20% from 1 January 2025.

Fees paid on or after 29 July 2024 for a term starting in January 2025 or later are also caught, so paying in advance does not avoid the charge. Private schools in England will also lose charitable relief from business rates from April 2025. Schools should make sure they are registered for VAT and review how much VAT they can now recover on their costs. Please note that the High Court dismissed a human rights challenge to the change on 13 June 2025, the Court of Appeal dismissed a further appeal on 2 March 2026, and the Supreme Court is due to hear a final appeal in December 2026.

4.2 Stamp duty surcharge on additional homes rises to 5%

The higher rates of stamp duty land tax for additional dwellings went up by two percentage points from 31 October 2024.

The surcharge on purchases of second homes and buy-to-let properties rose from 3% to 5%, and the single rate paid by companies buying residential property for more than £500,000 rose from 15% to 17%. Transitional rules can protect contracts exchanged before 31 October 2024. Landlords and buyers of additional properties should build the higher cost into their plans.

4.3 Fuel, alcohol and vaping duties

The Budget froze fuel duty, cut duty on draught drinks and confirmed a new duty on vaping products.

Fuel duty was frozen for 2025/26 and the temporary 5p a litre cut was kept for another year. From 1 February 2025, duty on qualifying draught products falls by 1.7% while other alcohol duty rates rise in line with RPI inflation, and a new vaping products duty of £2.20 per 10ml of liquid starts on 1 October 2026. Please note that the November 2025 Budget extended the 5p cut until the end of August 2026, with the rate then rising in stages between September 2026 and March 2027.

5. Key dates

The main deadlines and events for October to December 2024 are set out below.

6. And finally

6.1 The first Budget delivered by a woman

When Rachel Reeves presented the Autumn Budget on 30 October 2024, it was the first Budget in history to be delivered by a woman. She had been appointed in July 2024 as the first female Chancellor of the Exchequer, an office with a history of more than 800 years.

It was also the first Labour Budget since March 2010, when Alistair Darling was Chancellor. Several of the measures announced that afternoon, from capital gains tax rates to inheritance tax on pensions, appear earlier in this update.