Autumn Budget 2024: what do the experts say about the major changes? 

Labour’s first Autumn Budget in 14 years took place on 30 October, and there’s much to digest. 

We understand that the Budget can be overwhelming, so we’ve compiled some interesting insights and analyses from various financial advisers in the UK. 

Pensions and inheritance tax  

From April 2027, unspent inherited pensions will become subject to inheritance tax (IHT), marking a huge departure from the current rules where any money can usually be passed on free of IHT. 

Many experts had much to say about the proposed changes. 

Why you should wait for clarity - Andrew Neligan and Scott Paul Davis  

“Making an immediate reactive decision is unwise. The consultation period ends in January, after which we will have greater clarity and a further two years before the legislation takes effect to make informed decisions. 

“Until that time, nothing has changed; pensions remain a very tax-efficient means to save for the future,” said Neligan. 

Scott Paul Davis from 3D Financial Planning agrees, stating: “It is advisable to await the outcomes of this consultation before making any adjustments to your pension planning. 

“The consultation will run for 12 weeks between 30 October 2024 and 22 January 2025.” 

‘This could impact millions of Brits’ - Edward Lane, AFH Wealth Management 

“This move is not just a technical tweak but a fundamental change that could impact millions of Britons who have responsibly saved into pensions with the intent to secure a comfortable retirement and provide for their families after they are gone.” 

‘It disincentivises saving’ - Jamie Kent, Aegis Financial Planning 

“Rachel Reeves telegraphed no reintroduction of the lifetime allowance for months, but instead, she has penalised the private sector even more harshly by making defined contribution pensions liable for IHT. 

“It feels dishonest and will ultimately disincentivise saving in a country where people do not save nearly enough for retirement. 

“It could also severely hamper the ability for many parents to leave a sufficient and therefore vital legacy for children with special needs - there has been little to no attention shown to this issue from the chancellor.” 

‘It’ll have a profound impact on families’ – Paul Willans, AJB Wealth 

“This Budget will have a profound impact on families and how they should plan to mitigate IHT. 

“Apart from the reduction in direct tax reliefs, the chancellor's proposed pension changes will result in more assets being liable for tax. 

“In addition, this will result in valuable reliefs, such as the residential nil-rate band being reduced and possibly completely lost. 

“For example, the children of a surviving spouse with an estate of £2 million and an inherited pension of £700,000 could be facing an additional tax bill of £560,000.” 

‘It’s a double tax’ - Aimee Stittle, ESDG Accountancy 

“Many people may not be aware that bringing pensions into the scope of IHT is actually a double tax. 

“If the deceased was over 75 years old and their IHT allowances have already been used elsewhere, then their estate will pay IHT on their pension savings at 40%.  

“Then, when their beneficiaries draw down on the inherited pension, they will be liable to income tax at their marginal rate, up to 45%.  

“To put this into context, the tax on £100,000 of pension savings would be £40,000 of IHT, followed by £27,000 of income tax if the beneficiary is an additional rate taxpayer beneficiary. 

“That leaves just £33,000 after tax.” 

Why unmarried couples need to be wary - Jason Witcombe, Empower Partners 

“Unmarried couples will need to be particularly careful with the April 2027 pension changes as they won't benefit from the spousal inheritance tax exemption. 

“Whereas pension assets could currently pass to the survivor free of tax, this isn't expected to be the case post-April 2027.” 

What non-doms must consider - Eugen Neagu, N2 Asset Management 

“For inherited tax, the non-dom status will be significantly reformed from 6 April 2025.  

“There will be new rules based on long-term residency. In short, someone who has been a UK resident for more than 10 years in the last 20 years will have his/her estate subject to IHT on a worldwide basis. 

“For people who do not meet the long residency test, their UK in-situ assets like residential and commercial property, bank accounts, and deposits held in UK banks will remain subject to IHT as before. 

“From 6 April 2027, UK pension funds will also be considered in-situ assets and subject to IHT, if not within the nil-rate band.”  

What are experts recommending to tackle the pension and IHT changes? 

While getting financial advice is advised, equity release is also encouraged to reduce your IHT bill. There are also calls for people to rethink how they use their pension if they plan to use it to avoid IHT. 

Consider equity release - Clive Balchin, James Trickett & Son 

“Equity release plans provide tax-free cash, which can be spent or gifted outside of your estate to reduce your IHT liability. 

“Upon death, your IHT bill is calculated from your assets, less your liabilities. Equity release will need repaying, reducing your estate's value and minimising your IHT bill.” 

Draw down on pension funds and gift surplus income - Andrew Sheena, Cooper Parry Wealth 

“Future planning options could include drawing down on pension funds and gifting surplus income under the normal expenditure out of income rules; for others who are younger, sitting tight and retaining the tax-free growth of their pension fund might well be sensible.” 

‘‘Set and forget’ is no longer a reliable strategy’ - Paul Bartlett, Piccadilly Wealth Management 

“With these new complexities [for pensions], to simply ‘set and forget’ is no longer a reliable strategy. 

“Adapting to these changes isn't just a matter of adjusting a few numbers, it requires a clear, well-informed approach to maximise tax efficiency and secure your retirement plans. 

“Seeking professional advice can help you stay ahead, avoid costly missteps, and make the most of these shifts.” 

What about capital gains tax? 

Capital gains tax (CGT) for basic-rate taxpayers rose from 10% to 18% and from 20% to 24% for higher-rate taxpayers from 30 October 2024.   

Rates for business asset disposal relief (BADR) and investors’ relief will rise from 10% to 14% from 6 April 2025, then to 18% from 6 April 2026. 

‘Increased rates not as severe as expected’ - Rohan Badenhorst, Financial Executives Group 

“Although the widely speculated CGT rate increase did materialise in the Autumn Budget, the increased rates were not as severe as had been expected. 

“Anti-forestalling measures with BADR rates due to rise in April 2025, as an example, might need to be considered, and expert input should still be sought in navigating the CGT landscape after the Budget announcement.” 

‘Take advice’ – Daniel Boden, Abode Financial Planning 

“Basic rate taxpayers may pay some higher rate CGT on large gains. It's worth taking some advice if you are unsure how to calculate this.” 

Stamp duty  

Stamp duty for second homes, buy-to-let residential properties, and companies purchasing residential properties rose from 3% to 5% from 31 October.

The 0% stamp duty threshold is set to fall from £425,000 to £300,000 in April 2025 for first-time buyers in England and Northern Ireland.  

‘Unlikely to impact investors’ decision making’ - Paul Waterfall, WR Ethical  

“In the longer term, this is unlikely to impact investors' decision-making too much, given the increase in CGT on other investments. 

“However, it is a big hit to those homebuyers who are moving in together but don't want to sell their first home (which is often kept as a safety net), or to those who have supported family members by going on a joint mortgage and are now looking to buy themselves.” 

‘Stamp duty increase undeniable unfair’ - Oliver Reece, Bright Future Mortgage Advisors 

“The immediate implementation of the stamp duty increase for second property owners was undeniably unfair, leaving many unprepared and creating significant distress among buyers who were in the midst of transactions. 

“This sudden change has disrupted countless property chains, causing unforeseen financial strain and delaying completions.” 

Employers’ national insurance 

Employers' national insurance (NI) contributions will rise from 13.8% to 15% from April 2025, while the threshold when businesses start paying NI contributions will be cut from £9,100 to £5,000.    

The amount employers can claim from their NI bill will rise from £5,000 to £10,500.  

‘Combined effect of changes expected to be significant’ - Leon Stevens, Blue Tick Tax Advisers & Accountants 

“The combined effect of these changes is expected to be significant. 

“For instance, an employer with an employee earning £20,000 annually will see their NI contribution bill increase by £746 (nearly 50%) in the 2025-26 tax year. 

“However, the expanded employment allowance may help offset some of these costs for smaller firms.  

“While the increased employment allowance offers some relief, small business owners should start planning now for these impending changes.  

“It's advisable to review staffing structures, pricing strategies, and overall business models to adapt to the new NIC landscape coming in April 2025.” 

‘Consult an accountant’ – Akshaye Proag, Frampton House Accountants 

“For small owner-managed companies, where the sole director/shareholder is currently extracting profits from their company through a combination of salary and dividends, it is recommended to consult your accountant regarding any changes to be brought in the salary/dividend mix to remain tax efficient as from April 2025.” 

Need help with your financial goals?  

Unbiased can help by quickly matching you with a qualified financial adviser regulated by the Financial Conduct Authority (FCA). 

They can look at your unique circumstances and goals and decide on the right course of action, whether you’re investing, estate planning, or buying a home.