The Autumn Budget 2024: Impact on HNW and Internationally Mobile Individuals

The Autumn Budget delivered by Chancellor Rachel Reeves on 30 October 2024 represented the most significant reshaping of the UK tax landscape since the 2010 austerity measures. For HNW individuals, business owners, and investors, several changes required immediate and comprehensive reassessment of financial planning structures, estate plans, and investment portfolios.

This article analyses the key changes and their practical implications for internationally mobile and high-net-worth individuals.

Capital Gains Tax: Rate Increases

The headline change: CGT rates on most assets increased with immediate effect from 30 October 2024.

Previous rates (pre-Budget):

• Residential property: 18%/28% (basic/higher rate)
• Other assets: 10%/20%

Post-Budget rates (from 30 October 2024):

• Residential property: 18%/24%
• Other assets: 18%/24%

The headline changes from the investor perspective:

• Residential property CGT on higher-rate disposals was reduced from 28% to 24% — a modest improvement
• All other assets (shares, investment bonds, commercial property, business assets) increased from 10%/20% to 18%/24% — a substantial increase, particularly for basic-rate taxpayers (from 10% to 18%)

The practical impact on investors:

For a higher-rate taxpaying investor who had £500,000 of gains in a share portfolio, the CGT on disposal would be approximately:

• Pre-Budget (20%): £100,000
• Post-Budget (24%): £120,000

A difference of £20,000 on a single transaction. The magnitude of the increase is felt most acutely in the basic rate band — where the rate nearly doubled — and for commercial property disposals, where the previous 20% main rate became 24%.

The planning response: For those with large unrealised gains in non-residential assets, crystallising gains before 30 October 2024 was the optimal strategy where feasible. For ongoing portfolios, the higher CGT environment increases the relative attractiveness of tax-advantaged wrappers (ISAs, pension funds, offshore bonds) that shelter gains from CGT entirely.

Business Asset Disposal Relief: A Double Hit

BADR — formerly Entrepreneurs' Relief — was a favourite for small business owners selling their companies. The Budget delivered a double blow:

Rate increases:

• From April 2025: BADR rate increases from 10% to 14%
• From April 2026: BADR rate increases further to 18% (matching the full CGT rate on gains)

The progression to 18% effectively eliminates the meaningful differentiation between BADR and the standard CGT rate by 2026/27.

Lifetime limit confirmed at £1 million: The lifetime limit was maintained at £1 million (having been cut from £10 million to £1 million in the 2020 Budget). The combination of the rate increase and the £1 million cap significantly reduces the benefit of BADR compared to its original Entrepreneurs' Relief incarnation, when rates were 10% and the lifetime limit was £10 million.

The impact on business owners:

A business owner selling a company at a £3 million gain would previously have paid:

• First £1 million at BADR rate (10%): £100,000
• Remaining £2 million at main rate (20%): £400,000
• Total CGT: £500,000

Post-Budget (using April 2025 rates):

• First £1 million at BADR rate (14%): £140,000
• Remaining £2 million at main rate (24%): £480,000
• Total CGT: £620,000

An additional £120,000 on a single transaction. By April 2026/27, when BADR rises to 18%, the rate equals the lower (basic-rate) CGT rate — though the higher-rate CGT charge on the same gains remains 24%.

Pension IHT: The Most Significant Long-Term Change

The Budget announcement that arguably has the greatest long-term impact on wealth planning is the inclusion of unused pension funds in the estate for IHT purposes, from April 2027.

The current position: Defined contribution pension funds left on death pass outside the estate for IHT purposes entirely, and can typically be passed to nominated beneficiaries free of IHT. This has made pensions one of the most tax-efficient vehicles for intergenerational wealth transfer.

From April 2027: Unused pension pots will be included in the deceased's estate for IHT purposes. The deceased's personal representatives (PRs) will be primarily responsible for reporting and paying any IHT due on unused pension funds and death benefits, with pension scheme administrators withholding a portion pending settlement. The income tax that beneficiaries pay on withdrawals from an inherited pension will continue to apply — so in the worst case, the combination of IHT (40%) and income tax (45% for additional rate taxpayers) could result in only 33p in every £1 reaching the ultimate beneficiary.

The planning implications:

• Drawdown decisions revisited: If the pension pot will ultimately be subject to IHT, the traditional strategy of maximising the pension fund (and drawing on other assets first) may no longer be optimal. Drawing down the pension during your lifetime, paying income tax, and gifting or investing the proceeds may produce a better overall family outcome.
• Equalising assets: Where possible, drawing on the pension to equalise the estate between pension (now IHT-exposed) and non-pension assets.
• QROPS: Overseas pension schemes (QROPs) held by UK domiciled or long-term resident individuals will also be affected. The interaction with the overseas pension regime requires careful analysis.

The Finance Act 2026 received Royal Assent, enacting the pension IHT framework. Secondary legislation covering information-sharing requirements between personal representatives and pension scheme administrators is still being finalised, and specialist advice is recommended — particularly for QROPS and defined benefit arrangements.

Inheritance Tax: Business Property Relief Cap

Business Property Relief (BPR) and Agricultural Property Relief (APR) have historically allowed business owners and farmers to pass qualifying business assets and agricultural land through their estates at 0% IHT (100% relief), regardless of value.

The Budget change: From April 2026:

• The combined 100% BPR/APR relief remains for the first £2.5 million of qualifying business and agricultural assets per estate
• Above £2.5 million, the relief rate reduces to 50% (effectively a 20% IHT rate on the excess, rather than 0%)

The cap was originally announced as £1 million in the October 2024 Budget, but the government raised it to £2.5 million in December 2025. The £2.5 million allowance is transferable between spouses and civil partners (up to around £5 million per couple). AIM and other unlisted shares qualify for 50% relief only and do not draw on the £2.5 million allowance.

The impact:

For a farming family with a farm worth £5 million:

• First £2.5 million: 100% BPR/APR, no IHT
• Next £2.5 million: 50% relief, 50% exposed to IHT at 40% = £500,000 in IHT

This represents a fundamental change to agricultural and business succession planning for larger estates. Family farms and family businesses that previously passed IHT-free now face significant IHT bills unless further planning is undertaken.

The planning response:

• Lifetime giving: Transferring business or agricultural assets into discretionary trusts or to the next generation during the owner's lifetime, using the annual BPR exemption and the 7-year PET rules
• Business valuation reviews: Understanding the split between qualifying and non-qualifying business assets
• Life insurance: Putting in place keyman life insurance or term assurance in trust to fund the IHT liability

Employer National Insurance Contributions

The change: From April 2025:

• The employer NI rate increased from 13.8% to 15%
• The secondary threshold (the salary above which employer NI is payable) reduced from £9,100 to £5,000 per year

For employers — particularly those with large workforces — this is a substantial additional payroll cost. For a company paying 100 employees an average salary of £40,000, the additional NI cost is approximately £125,000/year.

The impact on business value: Higher employer NI costs reduce profitability and, for businesses valued on an earnings multiple, reduce business values. Business owners considering a sale should factor the NI increase into their valuation analysis.

The salary vs dividend balance: The NI increase reduces the tax efficiency of salary extraction from owner-managed companies (particularly at levels above £5,000). The relative attractiveness of the salary/dividend mix for director-shareholders shifts further towards dividend extraction, though the interaction with personal pension contributions and the state pension record must be considered.

The Non-Dom Reform: Confirmed

The Budget confirmed the non-dom abolition previously announced in March 2024, with the Foreign Income and Gains (FIG) regime replacing the remittance basis from April 2025. The transitional provisions, the Temporary Repatriation Facility, and the IHT long-term residence test were all confirmed with amendments from the original consultation.

For the full analysis of non-dom changes, see our article on the UK non-dom regime history and future.

The Wider Context: What Wasn't Changed

Notably, the Budget did not:

• Increase income tax rates (the additional rate of 45% above £125,140 remains unchanged)
• Reduce the pension annual allowance (the £60,000 annual allowance, restored in 2023, was not cut)
• Introduce a wealth tax (frequently discussed in Labour circles, but not implemented)
• Change the ISA regime (£20,000 annual allowance maintained)

The non-changes are as important as the changes for planning purposes — the continued attractiveness of pension contributions and ISA wrappers means these remain the foundation of UK tax-efficient investing.

Compliance Caveats

Tax law changes frequently and the detailed implementation of several Budget 2024 measures (particularly pension IHT and BPR changes) is still being legislated. The rates and rules described in this article reflect the position as understood at mid-2026 but may differ from the final legislation. This article is for information only and does not constitute tax or financial advice. You should seek advice from a qualified adviser before making any decisions based on the changes described. Investments can fall as well as rise; tax benefits may not be maintained.

How Global Investments Can Help

Global Investments works with HNW and internationally mobile individuals to review and restructure their financial plans in the light of significant tax changes. If you have not yet reviewed your estate plan, pension arrangements, or investment portfolio structure in the context of the October 2024 Budget changes, please contact us. Our team can coordinate specialist tax and legal advice and help you build an integrated plan that addresses both current and future tax exposure.