Webinar recording: Budget 2024 – How does it affect you and what does it mean for the media sector?

14 November 2024 / Insight posted in Webinars

The Moore Kingston Smith media and marketing services team recently held a webinar on the Budget 2024 and its implications for the sector.

Focusing on what is most relevant to people businesses competing for an international skill base, making use of creative sector reliefs and funding growth through borrowing and fresh equity investment, the team analysed the announcements within the context of M&A activity. From an individual’s perspective, our experts also covered the personal tax implications of the changes outlined in the Budget.

We have subsequently compiled the key takeaways, which we hope will be helpful.

Our Budget 2024 takeaways for the media sector

Corporate tax

Changes to employer NIC, combined with the Employment Rights Bill and minimum wage increases, will make it more complex to employ people. Maximising the use of salary sacrifice arrangements will help to an extent but, for businesses across the wider media sector, these developments may lead to further use of freelancers and overseas talent (taking care to navigate associated tax considerations).
Businesses should prepare for the mandatory payrolling of benefits in kind from April 2026 – ideally start assessing benefits and expenses now to see how current processes could be impacted.
From 1 April 2025, film and high-end TV productions will be able to claim an enhanced 39% rate of AVEC on their UK visual effects costs (which will be exempt from the 80% cap on qualifying expenditure).
Businesses operating in both the UK and the US should consider a ‘Transatlantic Health Check’ to ensure that the latest relevant UK and US tax considerations (and their interaction) are being suitably considered.
From Budget day (30 October 2024) the rate of capital gains tax (for higher rate tax payers) increases to 24%.
Business Asset Disposal Relief (BADR) lifetime allowance is maintained at £1 million, but with an increase in the rate applicable to gains benefitting from BADR from 10% to 14% from 6 April 2025, with a further increase to 18% from 6 April 2026.

Personal tax

From 5 April 2025, the concept of domicile will be abolished, and a residence-based four-year foreign income and gains (FIG) regime introduced.
From 6 April 2026, business property relief for IHT purposes will be 100% up to a combined limit of £1m and then restricted to 50% relief thereafter.
From 6 April 2027, unused pension funds and death benefits will be subject to IHT.
UK IHT will be based on long-term residence rather than domicile. An individual is a long-term resident (and in scope for inheritance tax on their worldwide assets) when they have been resident in the UK for at least 10 out of the last 20 tax years.

Admin and HMRC Powers

From 6 April 2025, there will be an increase in late payment interest rate by 1.5% to 9% on outstanding tax balances.
HMRC are consulting on ways to tackle non-compliance and requirements for taxpayers to self-correct and report when errors spotted.

M&A market update

For the media and marketing services M&A market, the budget was not as bad as feared from a capital gains tax perspective. More challenging for media and marketing services businesses is the increase in employer NICs, which will impact margins and, in turn, valuations. For businesses that are growing revenue, and operate at a strong margin, acquirer interest remains strong, particularly for sought-after capabilities.