The Autumn Budget 2024 and what this may mean for divorcing couples
The Autumn Budget 2024, delivered on 30 October by Chancellor Rachel Reeves, introduced several key measures that will affect individuals and businesses alike. Below is a summary of some of the key changes, along with their implementation dates and potential implications for couples navigating a financial settlement during divorce.
Key Changes in the Autumn Budget 2024
- Increase in Capital Gains Tax (CGT)
- Change: The lower rate of capital gains tax (CGT) will be increased to 18%, and the higher rate will increase to 24% from 30 October 2024. CGT rates on residential property will be maintained.
- Impact: This increase will mean that if divorcing couples need to sell valuable assets, such as shares or artwork, to fund their settlement, they will likely incur significantly higher tax liabilities. Couples should be aware that this change could substantially reduce the net proceeds from any sales, impacting the overall financial settlement.
- Increase in National Insurance Contributions
- Change: Employers’ National Insurance Contributions will be increased to 15% from April 2025.
- Impact: This increase can affect the take-home pay of individuals, which may, in turn, impact their financial capacity during divorce proceedings. If either party owns a business, the higher National Insurance Contributions could influence profitability and business valuations during negotiations.
- Minimum wage Increase
- Change: National minimum wage will increase by 6.7% to £12.21 for a full-time worker from April 2025.
- Impact: This change may enhance the income for lower-earning individuals, potentially affecting spousal maintenance calculations. If one spouse operates a business, adjustments related to minimum wage could lead to increased operational costs, influencing overall business valuations.
Considerations for divorcing couples
Selling assets and capital gains
With the increase in the rate payable of CGT, couples should carefully consider their strategies for selling assets. If selling certain capital assets becomes necessary to facilitate a financial settlement, understanding the tax implications is crucial.
Business valuations
For couples where one or both parties own a business, the increase in National Insurance and minimum wage may lead to changes in business profitability. Accurate valuations will be essential during negotiations.
Conclusion
The Autumn Budget 2024 presents several important financial changes that will impact divorcing couples, particularly the increase in the CGT rate. Understanding these changes and their potential effects on financial settlements can aid couples in making informed decisions during this challenging process.
For personalised guidance, consider consulting with our specialist solicitors at Lux Family Law. Our team is well-equipped to help you navigate these changes and secure a fair financial settlement.