Six Budget takeaways
Relief, there was no material policy change or agreement to consult.
contributions do not exceed the annual allowance of £60,000). But, from April 2029, the amount of salary that can be sacrificed will be capped at £2,000 a year. The scheme is attractive to employees and companies alike by delivering savings on National Insurance (15% for employers and between 2%-8% for employees) and Income Tax. The new rules mean businesses will incur an additional cost of 15% above the £2,000 cap but, in reality, this is just removing a previous saving. It will be important to revisit salary sacrifice schemes before April 2029, especially for those currently sharing some of the 15% NIC saving with the employee, by paying more into the pension than salary actually sacrificed. Income tax on investment income Some of the most intense pre- Budget speculation focused on whether or not the Chancellor would break a manifesto commitment and put 2% on income tax rates. Ultimately, she chose not to. Instead increases were restricted to income earned through dividends, interest and property rental.
Chris Romans Chair of the FBUK Tax Committee
There was, however, one minor win for smaller family businesses (something FBUK had pushed for) to allow the £1 million allowance for 100% BR to be transferable between spouses. This brings the policy into line with the existing ability to transfer the nil rate and residence nil rate band. For a married couple in a family business, this means they should benefit from £2 million of BR allowance, without the need for more complex structuring. While this is a small step, and one we welcome, failing to consider more material concessions on BR is a missed opportunity to drive growth. Furthermore, by pushing out the point at which the £1 million allowance will be linked to inflation to April 2031, the value of the relief will be further eroded. Pension Salary Sacrifice True to pre-Budget leaks, the Government will cap the amount of money employees can ‘sacrifice’ from their salary into a pension. Currently there is no limit on this (provided
Let’s start with some good news. After one of the longest build ups to a Budget and some of the greatest speculation I can remember, we can all breathe a sigh of relief that it has finally happened.
But, despite some of the more worrying rumours failing to
materialise, this Budget will leave the UK with the highest overall tax take since the second world war - at a time when government should be laser- focused on growth and productivity. While there are many areas I could explore at length, I wanted to offer you my six initial takeaways from Budget 2025. No real change on IHT Business Relief Notwithstanding all the hard work of my colleagues at FBUK, other trade bodies, farmers and family businesses lobbying to amend last year’s bombshell changes to IHT Business
FBUK Issue 5 12
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