Tax measures to bring economic stability and grow the economy have been enshrined through the publication of the Finance Bill 2024-25.
At last week’s Budget the Chancellor set out the pillars of the government’s plan for growth, including the focus on high growth sectors. The Bill supports the delivery of the plan through key tax changes in the UK’s creative, clean energy and financial services industries.
The Creative Industry will get a £295m boost in tax savings to productions using visual effects, solidifying the U.K. as a global hub for film and TV. The Bill means that, from 1 April 2025, UK companies will be able to claim an enhanced 39% rate of Audio-Visual Expenditure Credit and UK visual effects costs will be exempt from the Audio-Visual Expenditure Credit’s 80% cap on qualifying expenditure.
To support the growth of the electric vehicle industry, the Bill also supports the switch to EVs. It will extend the availability of First Year Allowances – enabling companies to deduct 100% of the cost of qualifying equipment from profits before tax – on new zero-emission cars and plant or machinery for electric vehicle (EV) charge-points.
This will be extended to 31 March 2026 for corporation tax purposes, and to 5 April 2026 for income tax purposes. Changes also support innovation in UK markets and encourage growth by improving a new type of trading platform, the Private Intermittent Securities and Capital Exchange System (PISCES).
It allows private companies to trade their equity in ways similar to publicly listed companies helping them scale-up on their journey to IPO. The Chancellor of the Exchequer Rachel Reeves said: “Growth is our number one mission – and it depends upon stability.
“We’ve taken difficult decisions to restore that stability and now we’re going for growth.” Exchequer Secretary to the Treasury, James Murray (pic), said: “Last week’s Budget was a generational moment to wipe the slate clean by restoring economic stability and fixing the public finances, so that we can get on with our number one mission of growth.
“The Finance Bill will begin laying new paths to growth for key sectors with tax reliefs across film and TV, electric vehicles, and financial services.” The Budget also set out the difficult decisions taken to fix the foundations and restore stability to the public finances, helping address the £22 billion fiscal hole inherited by the government.
The Finance Bill legislates for some of these difficult choices:
- This includes the manifesto pledges for the VAT break on private school fees to end, closing the loopholes in the non-dom tax regime, increasing and extending the Energy Profits Levy, and beginning the process of reforming the tax treatment of carried interest by increasing the applicable rates of Capital Gains Tax (CGT).
- It also increases the CGT main rates from 10% to 18% for those paying the lower rate, and 20% to 24% for those paying the higher rate. The rate for Business Asset Disposal Relief and Investors’ Relief will increase to 14% from 6 April 2025, and will increase again to match the lower main rate at 18% from 6 April 2026. These rate changes are expected to raise £2.5 billion by 2029-30, helping repair the public finances while maintaining the lowest headline CGT rates of any European G7 country.
- In a move estimated to result in 130,000 additional transactions over the next five years by first-time buyers or home movers, the Bill legislates for increasing the Higher Rates for Additional Dwellings on Stamp Duty Land Tax by 2 percentage points from 3% to 5%.
- Balancing public health objectives, cost of living pressures and the cultural importance of British pubs, the government will uprate alcohol duty on non-draught products in line with RPI, whilst cutting duty rates for draught products, taking a penny of duty off an average strength pint.
- The Bill also simplifies alcohol duty by legislating for the alcohol duty stamps scheme to end from 1 May 2025, reducing the administrative burden on spirit producers and importers, including Scotch Whisky distilleries.
