The lower CGT rate will go up from 10% to 18%, and the higher rate will be increased from 20% to 24%. Employers’ NIC will increase by 1.2 percentage points to 15% from April 2025, and the threshold for employer contributions will decreased from £9,100 to £5,000.

Other key points announced in today’s statement include:

• For individuals, income tax and national insurance thresholds will remain frozen for the time being and rise with inflation from 2028-29.
• The Inheritance Tax (IHT) £325,000 threshold will remain frozen. Business and agricultural assets over £1 million will face a 20% inheritance tax.
• Alcohol: Draught duty will be cut by 1.7%, equivalent to a penny off a pint.
• Vapes: A new levy will be introduced and rise in line with tobacco duty.
• Fuel Duty: The freeze on fuel duty will be extended for another year.

Regarding the rise in CGT, Andrew Noble, partner at Par Equity, said: “Labour’s manifesto was built on a plan to kickstart economic growth. Unfortunately, however, the hike in capital gains tax runs in direct contradiction with this mission and disincentivises entrepreneurs (and investors) to build the next generation of companies to meaningfully reform the UK.

“Furthermore, this will have a greater impact on regional innovation in Scotland as current and future entrepreneurs weigh up the most attractive destinations to start and scale their businesses in the next 10-15 years.

“As a venture capitalist focused on the North of the UK, we know that many entrepreneurs start businesses in Scotland because of the region’s strength in tech and advanced manufacturing, following a successful career in London and further afield.

“This group of entrepreneurs is highly mobile and also have the option to relocate overseas. Indeed, a recent survey of 500 business founders found that as much as 72% are now looking to move abroad to countries with more favourable economic structures.

“The rise in CGT undermines the strength of the UK’s entrepreneurial spirit, making it harder to attract and retain the very innovation and talent that can grow our economy to a more prosperous future.

“It’s crucial for the government to support our risk takers, business builders and wealth creators. Without them, we’ll lack the growth and investment needed to build a strong, resilient economy for the benefit of Scotland and the rest of the UK.”

Nikki Lidster, head of SME at Zurich Insurance, commented: “An increase in Employer’s National Insurance contributions to 15% in April 2025 alongside the increase in the National Living Wage to £12.21 per hour and the reduction in the allowance to £5,000, despite the reform to the employment allowance, will hit small and medium-sized enterprises (SMEs) hard at a time when many are already struggling to make ends meet.

“While the increase in NI will raise significant revenue, the lack of time to prepare will mean many small businesses could struggle to forecast the impact of the increase on their longer-term financial planning. An increase such as this could mean SMEs won’t be able to invest in business development, new and existing talent or fulfil expansion plans in the future.” 

Kevin Brown, savings specialist at Scottish Friendly, noted that “tax-efficient wrappers” including SIPPs, ISAs and JISAs, remain “an accessible way to make the most of savings for the majority of UK households”, allowing individuals to “shield” their investment from CGT.

He added: “Here’s hoping the attention these changes get in the media over the coming days and weeks doesn’t spook people into inaction – putting aside even just a little money each month can build a solid financial buffer for whatever life throws at us. Doing so tax-efficiently can help to ensure your hard-earned money works equally hard for you in return.”