UK Tax Changes 2024-2027: What You Need to Know
Tax Changes coming into immediate effect
The property market faces immediate upheaval with Stamp Duty Land Tax changes. Additional property purchases now incur a 5% surcharge (up from 3%), pushing total costs to 17% for additional properties and 19% for non-UK residents. First-time buyers face reduced support, with the zero-rate band dropping to £300,000 from £425,000, and the threshold for standard stamp duty falling to £500,000 from £625,000.
The Next 12 Months
The most significant impact comes from payroll tax increases, representing the largest portion (£20-25 billion) of the total £40 billion tax rises. Employers face additional costs of £800-900 per employee, though the Employment Allowance offers some relief.
This hits particularly hard for micro-entities (businesses with up to £10 million turnover and 50 staff) and the hospitality sector through changes to the secondary threshold. For businesses, the landscape becomes more complex.
Double-cab pickup trucks lose their favorable tax treatment, returning to car status. Company car benefit-in-kind rates for electric vehicles will gradually increase, affecting fleet planning decisions.
Looking to 2026
Capital Gains Tax undergoes substantial changes. The government has maintained the 28% rate, recognizing that higher rates might reduce revenue by up to £2 billion through the Laffer curve effect.
Business Asset Disposal Relief faces increases, with most CGT rates harmonizing at 18% at the lower rate and 24% at the higher rate.
Employee share schemes face new scrutiny. Share save plans and options exceeding £3,000 will require CGT returns to be completed and CGT payments to be made - a change so wide ranging that could impact supermarket employees to investors.
Furnished Holiday Lets face significant changes: while existing Capital Allowances remain, new ones are prohibited, interest relief is eliminated, and only a 20% tax credit remains. Disposals won't qualify for Business Asset Disposal Relief.
2027 and Beyond
Making Tax Digital expands significantly, with the threshold lowering to £30,000 in April 2026 and further to £20,000 in April 2027.
The inheritance tax landscape transforms dramatically. Thresholds remain frozen until 2030 - marking a 20-year freeze since their last increase.
From 2027, pensions will be included in IHT calculations, fundamentally changing retirement planning.
AIM shares, previously a valuable IHT planning tool, will be taxed at 20% from 2026.
Business Property Relief changes will significantly impact family and agricultural businesses, removing key tax planning opportunities.
Tax Planning - Actions to take now
For Business Owners:
Review payroll structures and Employment Allowance eligibility
Reassess vehicle fleet strategies, particularly regarding electric vehicles and double-cab pickups
Plan for reduced MTD thresholds
For Individuals:
Consider accelerating property purchases before stamp duty changes take full effect
Review share scheme participation and CGT implications
Evaluate pension drawdown strategies given new IHT rules before 2027
For Wealth Planning:
The middle classes face the greatest IHT impact, with traditional planning tools becoming restricted, with pensions now included in your estate for IHT purposes
Review succession planning structures for family businesses as Business Asset Disposal Relief increases
Consider alternative wealth preservation strategies as traditional routes close
The cumulative effect of these changes suggests a significant shift in tax policy, particularly affecting middle-class wealth preservation and small business operations.
While some reliefs remain, the overall direction is toward increased taxation and reduced planning opportunities. Early adaptation to these changes will be crucial for effective financial management.
