Budget 2024: Key Impacts on the UK Legal Landscape

Article written by Olga Kyriakoudi, Trainee Solicitor at Greene and Greene

The Budget 2024, unveiled by Chancellor Rachel Reeves, offers sweeping changes across various sectors. Here is a breakdown of the key announcements and their likely implications for the legal sphere in the United Kingdom.

Compensation for Past Injustices

In an effort to address historical injustices, the Chancellor announced substantial funds to compensate victims of two major scandals. £11.8 billion will be allocated to victims of the infected blood scandal, and £1.8 billion for those affected by the Post Office scandal. These provisions set a significant legal precedent by formally recognising the
financial responsibility owed to victims of systemic failings. This could prompt further legal scrutiny over similar historic cases where individuals or groups were affected by institutional negligence.

Tax Changes and Legal Ramifications for Employers

Among the notable tax changes, National Insurance contributions for employers will rise from 13.8% to 15%, effective from April 2025. This increase, coupled with a reduction in the threshold to £5,000, is expected to yield £25 billion. Such reforms may heighten the financial pressure on businesses, particularly small to medium-sized enterprises (SMEs). Legal counsels will likely need to guide employers on navigating this increase, balancing compliance while mitigating operational impacts. Additionally, a raised employment allowance to £10,500 will alleviate some of the
National Insurance burden for SMEs, potentially reducing the strain on smaller enterprises to comply with the new contributions structure.

Capital Gains Tax and Property Implications

The Chancellor announced an increase in Capital Gains Tax (CGT), raising the lower rate from 10% to 18% and the higher rate from 20% to 24%. This escalation affects property investors and may impact the structuring of real estate transactions, succession planning, and investment portfolios. Legal advisors specialising in property and tax law
will need to adjust strategies for clients, considering the heightened tax burden on the sale of secondary homes and other assets. Reeves also extended the inheritance tax threshold freeze to 2030, allowing estates up to £325,000 to remain exempt. However, business and agricultural reliefs will see reforms from April 2026, introducing a partial inheritance tax on assets exceeding £1 million. These changes prompt a need for proactive estate planning, potentially altering how legal professionals advise on inheritance and asset protection.

Employment Law Reforms

Reeves reinforced commitments to protect workers’ rights, including protection from unfair dismissal, anti-bullying measures, and enhanced paternity and maternity provisions. Such measures strengthen employment rights, requiring businesses to ensure compliance with evolving legal standards. Employment lawyers will likely see an
uptick in consultation needs as employers navigate these new protections. Moreover, as the government plans to reinforce pension entitlements with a projected 4.1% rise, legal specialists may be called upon to verify employer adherence to these obligations, especially within larger corporations with complex pension schemes.

Abolishment of the Non-Dom Tax Regime

The abolition of the non-domiciled (non-dom) tax status in April 2025 represents a seismic shift, particularly for international residents and businesses operating within the UK. Under the new residence-based system, all UK residents will pay tax on their global income. This change will drive demand for legal counsels on international tax
compliance, as the new system could influence the attractiveness of the UK for foreign investors. Tax attorneys and corporate lawyers will play a critical role in advising international clients on restructuring their UK-based interests under this new framework.

Corporate Compliance Initiatives

Reeves introduced a ‘Covid Corruption Commissioner’ and appointed David Goldstone to chair the Office for Value for Money. These appointments aim to reduce public sector waste and enhance financial accountability. With a 2% productivity savings target for government departments, legal oversight of public sector contracts and spending is
anticipated to increase. Regulatory bodies may require extensive legal support to enforce compliance with these new productivity and anti-corruption measures.

Changes to Private and Public Education Funding

The extension of VAT to private school fees and removal of business rates relief from 2025 are expected to generate substantial additional revenue. These measures may lead to legal challenges from private institutions, given the financial strain these changes impose on private education providers. Education lawyers may need to advise
institutions on restructuring or reclassification to mitigate the financial impact.

Environmental and Carbon Initiatives

A notable investment in carbon capture and storage underscores the government’s dedication to environmental advancement. Legal specialists in environmental law will play a crucial role in helping companies navigate evolving compliance requirements, as the UK pushes for broader adoption of sustainable practices. Additionally, increased air
passenger duty on private jets aligns with the government’s broader environmental objectives, potentially impacting corporate clients operating within aviation and related sectors.

Moving Forward

Budget 2024’s focus on social compensation, worker protection, and corporate tax reforms marks a new chapter for legal professionals navigating an increasingly regulated UK environment. Legal advisors across sectors must stay attuned to these changes to support their clients effectively, guiding them through the complexities of enhanced taxation, corporate governance, and workers’ rights protections. As the government seeks to balance its Budget without day-to-day borrowing, legal support will be essential in ensuring compliance, minimising liabilities, and adapting to the shifting regulatory landscape.