Autumn Budget 2024

Rachel Reeves delivered a historic budget, being the first female chancellor of the exchequer to do so. And the first Labour one for 14 years.

With an unusually long gap between election day and budget day the days were filled with rumours and speculation but now we can take you through some of the facts.

The Chancellor talked about the need to fix the foundations of the economy and deliver change by protecting working people, fixing the NHS and rebuilding Britain.

Lets look at some key highlights:

• National Insurance, VAT and income tax – will not increase. Freezes in income tax and National Insurance thresholds will not be extended beyond those already set. From 2028-29, personal tax thresholds will be uprated in line with inflation.
  
  
• Capital Gains Tax (CGT) – the lower rate will increase from 10% to 18%, and the higher rate from 20% to 24%. CGT is paid on profits made from selling assets including investments, such as shares, or second homes.
  
  
• Stamp duty land surcharge for second homes – will increase by 2% to 5%, from today.
  
  
• Inheritance Tax (IHT) – thresholds will now be frozen until April 2030, extended from April 2028. So the first £325,000 of any estate can be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants, and £1m when a tax-free allowance is passed to a surviving spouse or civil partner.
  
  The government is also consulting on removing the opportunity for individuals to use pensions as a vehicle for inheritance tax planning by bringing unspent pots into the scope of inheritance tax from April 2027, which will affect around 8% of estates each year.
  
  
• Basic State Pension increase – the State Pension Triple Lock will be maintained for the duration of this parliament. Spending on the state pension is projected to rise 4.1% in 2025-26 – a £470 increase for over 12 million pensioners in the UK.

• Agricultural property relief and business property relief – from April 2026 the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all, but for assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%.
  
  
• Employers National Insurance – National Insurance contributions by employers will rise from 13.8% to 15%. And the threshold at which businesses start paying National Insurance on a workers' earnings will be lowered from £9,100 to £5,000.
  
  To protect small businesses, the employment allowance will increase from £5,000 to £10,500, which will mean 865,000 employers won’t pay any National Insurance at all next year. And the amount employers can claim back from their National Insurance bill will increase from £5,000 to £10,500.
  
  
• National Minimum Wage – will rise by 6.7% in April 2025. Rates for those aged 21 and over are set to go up to £12.21 an hour worth up to £1,400 a year. And for people aged between 18 and 20-years old, it will increase from £8.60 to £10.

There were many announcements in the Autumn Budget and you can read the full Budget on gov.uk, but here are a few other key highlights;

• Fuel duty – 5p cut will be maintained and fuel duty will continue to be frozen.
  
  
• Tobacco duty – the tobacco duty escalator will be renewed at RPI +2%. Duty on hand-rolled tobacco will increase by 10% this year, a flat-rate duty on all vaping liquid will be introduced from 2026, and a one-off increase in tobacco duty, to maintain the incentive for smokers to give up smoking.
  
  
• Alcohol duty – Draught duty will decrease saving 1p off a pint in the pub.
  
  
• Electric Vehicles – existing incentives for EVs will continue in company car tax from 2028. The difference paid by fully electric and other vehicles in the first rates of Vehicle Excise Duty will be levelled up, starting from April 2025.
  
  
• Carers allowance – will increase from £81.90 per week to the equivalent of 16 hours at the National Living Wage per week.
  
  
• VAT on private school fees – will be introduced from January 2025. And legislation is planned to remove business rates relief from schools from April 2025.
  

Tax rules can change and the impact of taxation, and any tax relief, depends on your personal circumstances and where you live.

It’s likely that the changes in the Autumn Budget will impact your finances in one way or another. If you are looking for help navigate any of these changes or to help manage your finances in general, speaking to a financial adviser could be of real value.

If would like to speak to someone, our fully qualified and FCA registered advisers are here to help. Book a financial review and let’s see how we can get your money working harder.