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 Finance Bill confirms higher capital gains tax rates

The Finance Bill published on 7 November 2024 legislates for the higher rates of capital gains tax that took effect on Budget day, 30 October 2024.

For disposals made on or after 30 October 2024, the main rates of capital gains tax rose from 10% and 20% to 18% and 24%, the same as the rates for residential property. The Bill also contains the higher rates for business asset disposal relief, the end of the furnished holiday lettings regime and the new residence-based regime that replaces the non-dom rules from 6 April 2025, and it became the Finance Act 2025 on 20 March 2025. If you are thinking of selling shares, property or other assets, please talk to us about capital gains tax planning before you commit, as timing and reliefs now make a bigger difference.

1.2 Inheritance tax: pensions and business reliefs

After the Budget, the government is consulting on bringing unused pension funds into inheritance tax from 6 April 2027 and has set out how agricultural and business property relief will be restricted from 6 April 2026.

Under the Budget proposals, 100% relief would apply only to the first £1 million of combined agricultural and business property, with 50% relief above that, and relief on AIM shares would fall to 50% in all cases. Most unused pension funds and death benefits are due to form part of the estate from 6 April 2027, so it is sensible to review your pension planning and your will together. Please note that on 23 December 2025 the government raised the 100% allowance to £2.5 million, with any unused amount transferable to a surviving spouse or civil partner. Families who own farms or trading companies should revisit their succession plans now.

1.3 Actor’s £4.5 million sale of rights taxed as income

The First-tier Tribunal has held that £4.5 million received by the actor Rupert Grint for rights connected with his acting work was taxable as income rather than as a capital gain.

In 2011 Mr Grint transferred his acting business to a company for about £8.6 million and reported £4.5 million of this as a capital gain taxed at 10%. The tribunal agreed with HMRC that the sales of occupation income rules applied, because a main object of the arrangement was to avoid income tax, so the sum was taxed as income, with about £1.8 million of tax at stake. Anyone whose business depends on their personal skills should take income tax advice before selling it or the rights to future earnings, and if HMRC is challenging a past arrangement, our tax dispute resolution team can help.

Rupert Grint v HMRC [2024] UKFTT 956 (TC)

1.4 HMRC interest rates cut by 0.25%

After the Bank of England cut base rate to 4.75% on 7 November 2024, HMRC’s late payment interest rate fell to 7.25% and its repayment interest rate to 3.75% from 26 November 2024.

Rates for companies paying corporation tax by quarterly instalments changed earlier, from 18 November. The cut reverses only a small part of the increases of recent years, when late payment interest climbed steadily, and the Budget confirmed that the late payment rate will rise by a further 1.5 percentage points from 6 April 2025. If you expect to owe tax at the 31 January 2025 deadline, it pays to settle on time or, if that is not possible, to agree a Time to Pay arrangement with HMRC early.

2. PAYE and employment

2.1 Employer National Insurance Bill published

The bill to raise employer National Insurance contributions from 6 April 2025 was published on 13 November 2024.

The rate of employer (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 a year. To soften the impact, the Employment Allowance rises from £5,000 to £10,500 and the rule excluding employers with NIC bills of £100,000 or more is removed. The bill became law on 3 April 2025, so employers should budget for higher payroll costs and owner-managers may wish to review their mix of salary and dividends.

2.2 Discrimination settlement partly free of tax

The First-tier Tribunal has held that part of a settlement paid to a former employee for discrimination she suffered while employed was not taxable as earnings.

On leaving, the employee received a package covering deferred pay, equity awards, unfair dismissal, injury to feelings and discrimination during her employment. The tribunal decided that the sum for in-work discrimination was not earnings from the employment, although an element relating to equal pay was taxable, and HMRC accepted that the injury to feelings payment fell outside the tax charge altogether. Employers and employees negotiating termination payments should make sure the settlement agreement clearly allocates the sums between the different claims.

L v HMRC [2024] UKFTT 1044 (TC)

3. Business tax

3.1 No enterprise zone allowances for data centres

The Supreme Court has unanimously held that spending on two data centres did not qualify for 100% enterprise zone capital allowances.

Relief was available for spending under a contract made within ten years of the zone being created, and a contract was signed two days before that deadline in February 2006. The data centres actually built were substantially different from what that contract required, so the court held that the spending did not arise from obligations in place by the deadline. The decision is a reminder that capital allowances turn on the detailed contractual position, so claims that depend on a deadline should be checked carefully.

Cobalt Data Centre 2 LLP & Anor v HMRC [2024] UKSC 40

3.2 Furnished holiday lettings regime to end

The Finance Bill confirms that the special tax rules for furnished holiday lettings will be abolished from April 2025.

From 6 April 2025 for income tax, and 1 April 2025 for corporation tax, holiday lets are taxed like other residential lettings, so the profits no longer count for pension relief, mortgage interest relief for individuals is restricted to the basic rate and capital allowances are no longer available on new spending. Business asset disposal relief will generally not be available on later disposals, and anti-forestalling rules apply to certain contracts entered into from 6 March 2024. Holiday let owners should review their property plans, including the timing of any sale.

3.3 Business asset disposal relief rate rises

The capital gains tax rate for disposals qualifying for business asset disposal relief rises from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026.

The £1 million lifetime limit is unchanged, and investors’ relief follows the same rates, with its lifetime limit cut from £10 million to £1 million for disposals from 30 October 2024. Owner-managers planning a sale or retirement may want to consider timing, but the tax rate should not drive a commercial decision on its own, and we can help as part of planning for each stage of the business life cycle.

4. VAT and indirect taxes

4.1 VAT on private school fees from 1 January 2025

MPs approved the Budget resolution on 6 November 2024 giving immediate legal effect to VAT at 20% on private school fees from 1 January 2025.

The charge applies to education and boarding services provided by private schools for terms starting on or after 1 January 2025, and fees paid from 29 July 2024 for those terms are also caught. The measure was later enacted in the Finance Act 2025. Please note that the High Court dismissed a human rights challenge in June 2025 and the Court of Appeal rejected the appeal on 27 February 2026, and the Supreme Court has given permission for a further appeal, listed for hearing on 1 and 2 December 2026.

4.2 SDLT due on £200 million market value of a residential tower

The Upper Tribunal has held that stamp duty land tax group relief was not available on an intra-group transfer of a London residential tower, because tax avoidance was a main purpose.

In 2011 the lease of the tower passed between two companies in the same group for about £30 million when it was worth around £200 million, as part of a plan to obtain a corporation tax advantage. The tribunal agreed with HMRC that group relief was blocked by the anti-avoidance rule and that SDLT of about £8 million was due on the market value. Please note that the Court of Appeal dismissed a further appeal on 10 December 2025, although for different reasons, and the Supreme Court has given permission to appeal, with a hearing listed for February 2027. Groups planning property transfers should take advice before relying on group relief.

Tower One St George Wharf Ltd v HMRC [2024] UKUT 373 (TCC)

4.3 Second homes surcharge rises to 5%

The stamp duty land tax surcharge on additional residential property rose from 3% to 5% for transactions with an effective date on or after 31 October 2024.

The single rate for companies and other non-natural persons buying residential property for more than £500,000 also rose, from 15% to 17%. Transitional rules can protect some contracts exchanged on or before Budget day, so buyers part way through a purchase should check whether they qualify. If you are buying a second home or a buy-to-let, please ask us to call you before you exchange contracts.

5. Key dates

The main deadlines and events for November 2024 to January 2025 are set out below.

6. And finally

6.1 The Budget leak that cost a Chancellor his job

On 12 November 1947, as he walked into the House of Commons to deliver his autumn Budget, the Chancellor Hugh Dalton told a journalist from the London evening paper The Star about several of the tax changes he was about to announce, including a penny on beer, higher purchase tax and a doubling of profits tax. The details appeared in the paper before he had announced them to MPs.

Dalton apologised to the House and offered his resignation, which the Prime Minister, Clement Attlee, accepted on 13 November. Sir Stafford Cripps took over as Chancellor, and the episode is still cited whenever Budget details reach the press before Parliament hears them.