Today (30th October 2024), the Chancellor of the Exchequer, Rachel Reeves, presented Labour’s first Budget in 14 years to Parliament. The Autumn Budget 2024 pledges to raise around £40bn for government programmes focused on “national renewal” and narrowing the growing “black hole” in public finances. Our latest article highlights the key announcements in the Autumn Budget 2024.

Autumn Budget 2024

Chancellor Rachel Reeves has delivered Labour’s first Budget since 2010 after the party’s return to power in July’s general election. The Office for Budget Responsibility (OBR) predicts the UK economy will grow by 1.1% this year, 2% next year, and 1.8% in 2026. Inflation is predicted to average 2.5% this year and 2.6% next year before falling to 2.3% in 2026.

Please visit the government’s website to read the full Autumn Budget 2024.

Key announcements in the Autumn Budget 2024

Tax

National Minimum Wage

The legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April, and the rate for 18 to 20-year-olds to rise from £8.60 to £10 as part of a long-term plan to move towards a “single adult rate”.

Tax avoidance

Chancellor Rachel Reeves has vowed to crack down on unpaid taxes to raise £6.5 billion by the end of the forecast period. The Chancellor announced an investment to modernise HMRC’s systems using the very best technology and recruit additional HMRC debt and compliance staff.

The Chancellor also pledged to clamp down on umbrella companies that exploit workers, increase the interest rate on unpaid tax debt to ensure people pay on time and pursue promoters of tax avoidance schemes.

Employers National Insurance

Employers National Insurance is changing from April 2025 as part of a £25 billion tax raid on firms through this levy. Employers will be required to pay National Insurance on workers’ earnings above £5,000—currently £9,100. The rate of Employers National Insurance is also increasing 13.8% to 15%.

Income Tax

The rates of Income Tax and National Insurance paid by employees will remain the same. Income Tax band thresholds will be unfrozen in 2028 to prevent people from being dragged into higher tax bands as their wages rise, and they will rise in line with inflation.

VAT on private school fees

VAT on private school fees will be introduced from January 2025, with legislation soon to remove their business rates relief from April 2025.

Employment Allowance

The Employment Allowance, which allows companies to reduce their National Insurance liability, is set to increase from £5,000 to £10,500.

Inheritance Tax

Inheritance tax thresholds will be frozen for another two years until 2030. Inherited pensions will be subject to inheritance tax from April 2027, with changes to agricultural relief. The measures aim to raise over £2 billion a year.

Non-dom tax regime

The non-dom tax regime will be abolished. A new, residence-based scheme with “internationally competitive arrangements” will be introduced for temporary visitors to the UK as part of a package of changes aiming to raise £12.7 billion over five years.

Corporation Tax

The main rate of Corporation Tax which is paid by businesses with taxable profits over £250,000 is set to remain at 25% until the next election.

Business Asset Disposal Relief

£1 million Business Asset Disposal Relief to be retained but at an increasing rate.

Business rates

Business rates—The existing 40% on business rates for the retail, hospitality, and leisure industries will continue in 2025/6, up to a cap of £110,000 per business.

On business rates, from 2026-27, the Treasury intends to introduce two permanently lower tax rates for retail, hospitality and leisure properties, paid for by a higher multiplier for the most valuable properties.

Capital Gains Tax

Capital Gains Tax rates on carried interest will increase to 32% from April 2025, with further reforms the following year.

Capital Gains Tax will rise to 18% from 10% for lower-rate taxpayers and to 24% from 20% for higher-rate payers. However, the Tax on the sale of residential homes will remain steady at 18% to 24%.

Pensions

The pension credit will rise by 4.1% from around £11,400 per year to around £11,850 for a single pensioner. The Chancellor also announced a state pension triple lock, and spending on the state pension is projected to rise 4.1% in 2025-26.

Housing

The stamp duty surcharge paid on second home purchases in England and Northern Ireland will increase from 3% to 5%.

Social housing providers to be allowed to increase rents above inflation under multi-year settlement.

A new housing package will deliver up to 5,000 new affordable social homes with £500 million in new funding for the Affordable House Programme.

Benefits and fraud crackdown

Chancellor Rachel Reeves said she will crack down on fraud in the UK’s welfare system as part of reforms to ensure welfare spending is “more sustainable.” The Chancellor said the government will publish a “Get Britain Working” white paper designed to get the unemployed back to work and reduce the strain on the benefits system.

Other announcements

  • Tax on tobacco duty to increase by 2% above inflation and 10% above inflation for hand-rolling tobacco
  • 5p cut to fuel duty on diesel and petrol (due to end in April 2025) is extended for another year
  • Air passenger duty on private jets to rise by 50%
  • £11.8bn allocated to compensate victims of the infected blood scandal
  • £1.8bn set aside for wrongly prosecuted Post Office sub-postmasters
  • Extra £22.6bn for day-to-day spending on the NHS in England, and a £3.1bn boost to Budget for investment.
  • £2 cap on single bus fares in England to rise to £3 from January
  • Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation, but Tax on draught drinks cut by 1.7%
  • A flat rate on all vaping liquid will come into force from October 2026

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