After three months of relentless media speculation, the Autumn Budget 2024 was finally presented on 30 October 2024 by our first female Chancellor, Rachael Reeves. It included a very long list of changes affecting businesses, large and small as well as individuals. This blog focuses on changes that will affect creative businesses and those in the property sector.
Budget 2024 changes affecting both creative businesses and property businesses
Capital Gains Tax Increases
The main rates of capital gains tax (CGT) have increased significantly, effective from October 30, 2024:
For standard rate taxpayers: from 10% to 18%
For higher rate taxpayers: from 20% to 24%
This increase could impact creative businesses when selling assets or shares in their companies.
Business Asset Disposal Relief (BADR)
While the 10% rate for BADR remains for the rest of this tax year, it will increase to:
14% from April 6, 2025
18% from April 6, 2026
This change could affect creative business owners looking to sell their businesses or shares. The tax-free allowance remains at £1million.
Income Tax and National Insurance
The Chancellor promised that the Budget 2024 would not touch income tax, NI and VAT for ‘working people’ and while it’s true that these tax rates have not risen, the personal income tax threshold – the amount you can earn before paying any tax will remain frozen until April 2028. This freeze may result in more creative professionals paying higher taxes as their incomes rise with inflation but the tax-free amount fails to keep pace.
Employer NI contributions have increased from 13.8% to 15%. In addition, the secondary threshold (the salary at which NI employer contributions start) has reduced from £9,100 to £5,000. This is partly offset by an increase in Employers Allowance from £5,000 to £10,000.
Budget 2024 changes specifically affecting creative businesses
The Chancellor made some changes in the Budget 2024 to creative industry tax reliefs, notably:
Audio-Visual Expenditure Credit (AVEC)
From April 1, 2025, film and high-end TV productions will be able to claim an enhanced 39% rate of AVEC on their UK visual effects (VFX) costs.
UK VFX costs will be exempt from the AVEC’s 80% cap on qualifying expenditures. Costs incurred from January 1, 2025, will be eligible for these enhanced rates.
Independent Film Tax Credit
A new enhanced rate has been introduced for smaller UK film productions:
UK films with budgets under £15 million and a UK lead writer or director will be able to claim an enhanced 53% rate of AVEC from April 1, 2025.
Theatre, Orchestra, and Museums Tax Relief
The government has adjusted the rates for these sectors:
From April 1, 2025, the rates of Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Exhibitions Tax Relief will be set at:
- 40% for non-touring productions
- 45% for touring productions and all orchestra productions
These rates will apply UK-wide.
Continuation of Existing Reliefs
It’s worth noting that the existing creative industry tax reliefs will continue to be available until March 31, 2027:
- Film Tax Relief (FTR)
- Animation Tax Relief (ATR)
- High-end Television Tax Relief (HETR)
- Children’s Television Tax Relief (CTR)
- Video Games Tax Relief (VGTR)
Budget 2024 changes specifically affecting property landlords and businesses
Abolition of Furnished Holiday Lettings Tax Regime
The government has confirmed that it will abolish the furnished holiday lettings (FHL) tax regime, effective from:
- 6 April 2025 for Income Tax and Capital Gains Tax
- 1 April 2025 for Corporation Tax and Corporation Tax on chargeable gains.
This change aims to remove the current tax advantages that FHL landlords have over those who let out residential properties to longer-term tenants.
Inheritance Tax Changes
The inheritance tax threshold freeze has been extended from April 2028 to April 20301. This could impact property investors planning to pass on their assets to heirs.
Stamp Duty on Second Homes
There will be a higher stamp duty rate on purchases of second homes, buy-to-let residential properties, and companies purchasing residential properties. Stamp Duty Land Tax on these properties incurred an additional 3% above standard rate SDLT but this has now been increased to 5%. This increase could affect property investors and businesses expanding their portfolios.
Section 455 Tax Changes
The government is amending legislation to prevent shareholders from extracting untaxed funds from close companies (known as the S455 charge). This change, effective from October 30, 2024, could impact property businesses structured as close companies.
Capital Gains Tax on Property
While CGT rates have increased for other assets, the rates for residential property remain unchanged. This means property investors operating outside of a limited company won’t face additional CGT burdens when selling properties. In addition, there was no change to the Corporation Tax rates in the Budget 2024.
Struggling to figure out how the 2024 Budget affects you?
Green & Peter Accountants, in Whetstone, North London are specialists in working with creatives and businesses in the property sector. Give us a call on 020 8446 8100 to chat about your situation and how the Budget 2024 could impact your business and personal finances. Our expert team is ready to help you get clarity on the changes today.
