Progress of the bill 

Finance Bill 2024/25 was introduced to Parliament on 7 November 2024. It legislates for measures announced at the Autumn Budget 2024 and earlier. The bill is now at the Committee stage in the House of Commons, having completed its first and second readings.  

MPs considered and approved some of the clauses from the bill on 10 and 11 December 2024, including: 

• the changes to CGT rates and reliefs (clauses 7 to 12);
• the removal of the VAT exemption for private school fees (clauses 47 to 49); and
• the increases to rates of stamp duty land tax (SDLT) for some purchases of residential property (clauses 50 to 53). 

MPs are expected to consider the remaining clauses by 4 February 2025. The bill will move onto the report stage before having its third reading and then proceeding to the House of Lords. The bill will become law when it receives Royal Assent. 

ICAEW briefed MPs on its concerns with the legislation ahead of the Committee stage debates (see below).     

For further information, see ICAEW’s Finance Bill 2024-25 and Autumn Budget 2024 hubs. 

CGT rates and reliefs 

The bill makes a number of changes to CGT, including increasing the rates of tax on gains other than residential property and carried interest gains with effect from 30 October 2024 (ie, during the tax year 2024/25). 

ICAEW does not usually comment on tax rate changes as these are a policy matter for government. However, ICAEW believes that the government should avoid making mid-year rate changes to CGT.  

The changes have been made after the self assessment tax return for 2024/25 has been finalised and will therefore require workarounds. This makes tax compliance challenging, costly, and increases substantially the risk of innocent errors being made. For these reasons, ICAEW recommends that the government should commit to not making future mid-year rate changes to CGT. 

ICAEW will continue to monitor the situation regarding completion of the CGT pages of the 2024/25 tax return, and will provide further guidance in due course.   

For further reading, see ICAEW’s representation 86/24 and the article explaining the CGT changes announced at the Autumn Budget 2024.  

VAT and private school fees 

Legislation included in the bill removes the provision of education by a private school from the VAT exemption, making fees for such education taxable at the standard rate (20%). Some exceptions are made, including the provision of education in a nursery class. However, ICAEW is concerned that the draft legislation does not provide sufficient certainty to private schools in relation to nursery classes.  

For the purposes of this legislation, a nursery class means a class that is composed wholly (or almost wholly) of children who are under compulsory school age or, in Scotland, school age, and would not be expected to attain that age while in that class. The term ‘almost wholly’ is not defined in the legislation and there are differences of interpretation in the policy document and HMRC’s guidance. 

ICAEW believes that this is causing much uncertainty in the private school sector and could lead to schools challenging the definition of ‘almost wholly’ through the courts. 

ICAEW has set out its concerns in representation 89/24. ICAEW delivered a webinar on VAT on private school fees on 12 December 2024. The webinar is available to watch on-demand.  

Increased rates of SDLT for additional dwellings 

Finance Bill 2024-25 makes the following changes with effect from 31 October 2024: 

• the supplement for purchases of second or additional homes by individuals is increased from 3% to 5%; and
• the rate for companies and ‘non-natural persons’ buying UK residential property worth over £500,000 is increased from 15% to 17%. 

Taken together, the above changes mean that the highest rate of SDLT for residential property is 19%. As the highest rate of non-residential or mixed-use property is 5%, ICAEW is concerned that the changes will add to the incentive for purchasers to argue that a property is non-residential or mixed use. ICAEW recommends that the government should commit to undertaking a fundamental review of SDLT. 

For further analysis, see ICAEW’s representation 88/24. 

Furnished holiday lets (FHLs)  

The bill abolishes the tax rules for FHLs with effect from April 2025. In the absence of the FHL rules, ICAEW believes that a ‘brightline’ test is needed in the legislation to make it clear whether property letting activities qualify as a trade.  

Earlier in 2024, ICAEW called unsuccessfully for HMRC to consider introducing such a  test. It has now repeated its recommendation in a briefing to MPs. ICAEW’s work in this area has been informed by the Office of Tax Simplification’s November 2022 property income review.   

To learn more, read ICAEW’s representation 87/24. For further information on the abolition of the FHL tax rules, listen to the Tax Faculty’s podcast Checkout time for furnished holiday lets and see the recent article HMRC provides further guidance on FHL abolition. 

Employee ownership trusts (EOTs) 

Clause 31 and Schedule 6 of the bill make changes to the rules for EOTs. To learn more about the changes, see the earlier article ICAEW calls for changes to tax rules for EOTs. 

Abolition of ‘non-dom’ regime 

ICAEW is reviewing the legislation (Part 2 of the bill) that abolishes the current tax regime for non-UK domiciled individuals (non-doms) and replaces it with new rules for foreign income and gains. ICAEW’s comments will be covered in a future article.  

To read more about the existing position for non-doms that applies until 5 April 2025, see ICAEW’s explainer What is the non-dom regime?