After weeks of speculation, the day has finally arrived. Rachel Reeves delivered her first budget as Chancellor, aiming to plug the apparent £40bn hole in the country's finances. Here are the key takeaways from the budget that we think you ought to know. Income Tax As promised, there were no changes to income tax rates and unsurprisingly there were no changes to the tax-free personal allowance which remains at £12,570, or the income tax bands that determine the rate of tax you pay. The chancellor announced that tax thresholds would increase in line with inflation in 2028/29. As a reminder, income tax bands are as follows £0 to12,570 = Personal Allowance: 0% £12,571 to £50,270 = Basic rate: 20% £50,271 to 125,140 = Higher rate: 40% Over £125,140 = Additional rate: 45% There were no changes to income tax on dividends which was both a surprise and a relief. National Insurance Contributions (NIC) National Insurance for employees remains unchanged at 8% for basic rate taxpayers. Employers NIC has risen from 13.8% to 15%. The employment allowance of £5,000 has been increased to £10,500; this is a tax free allowance against the first £5,000 (now £10,500) of employer national insurance contributions. There remains no national insurance liability on dividends, which for many limited company owners is the primary source of business income. National Minimum Wage The national minimum wage for workers 21 and over has increased from £11.44 to £12.21; an increase of 6.7%. VAT VAT remains unchanged with the standard rate of VAT remaining at 20%. The VAT threshold at which it becomes compulsory for businesses to register for VAT also remains unchanged at £90,000. We're disappointed (but not surprised) that the threshold has not been further increased. Under the conservative government, the previous Chancellor Jeremy Hunt had increased the threshold from £85,000 to £90,000, which at the time was seen as a step in the right direction but far from in line with inflation and generally rising costs, which will bring many more business owners into the trappings of VAT. Corporation Tax Corporation tax remains unchanged; the government pledged not to increase corporation tax during their first term in office however it remains to be seen what future plans they may for this key tax affecting limited company owners. Capital Gains Tax (CGT) A rise in capital gains tax had been hotly anticipated and we're not surprised to see a rise in capital gains tax from 10% to 18% for basic rate tax payers and for higher rate taxpayers, the rate has increased from 20% to 24% on chargeable gains. The rate on capital gains from residential property has different rates which have remained unchanged. For basic rate taxpayers CGT is charged at 18% and for higher rate taxpayers it is 24%. Both residential gains and gains on other assets now share the same rates of taxation. Business Asset Disposal Relief (BADR) BADR, formally known as Entrepreneur's Relief is a capital gains tax relief for business owners selling their business. In simple terms, it allows a business owner to pay a reduced rate of 10% CGT on the sale of their business up to the value of £1 million. The rate had previously been far more generous with a reduced rate of 10% on values up to £10 million. The value was reduced down to £1 million for disposals on or after 11 March 2020 by the then chancellor and former prime minister Rishi Sunak. The chancellor announced that the rate of £1 million will remain unchanged, however the rates of taxation will increase from 10% to 14% and then to 18% over the next two years. Inheritance Tax (IHT) In a surprise announcement, inheritance tax thresholds remain unchanged until 2030. Inheritance tax for business and agricultural assets is set to change. Stamp Duty Land Tax (SDLT) The additional rate of stamp duty payable on second homes and by limited companies will increase from 3% to 5% effective from 31 October 2024.

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