Chancellor Rt Hon Rachel Reeves made history as the first female to deliver a budget and spoke for well over an hour as she announced her government's plans in the Autumn Budget today (30th October 2024). The theme for this budget was invest, invest, invest as bold claims of generating an extra £40 billion in tax were made.
Here are my key takeaways:
The chancellor declared "Today's budget marks the end of short-termism" and "There are no shortcuts". However, besides the main headlines very few of the plans introduced are as dire as predicted.
National Minimum Wage
From April 2025, the National Wage will be increasing across all levels. It is worth noting that the Chancellor mentioned wanting to move to a single rate of national living/minimum wage in the future, effectively removing the 18-20 year old bracket .
16 + 17 year olds and Apprentice will increase to £7.55 p/hr from £6.40
18-20 year olds will increase to £10.00 p/hr from £8.60
21 years olds + will increase to £12.21 p/hr from £11.44
Accommodation Offset £10.66 p/hr from £9.99
This means a part time employee (over 21) working 16 hours a week will have a minimum wage of £846.56 per month and/or £10,158.72 a year.
A full time employee (over 21) working 40 hours a week will have a minimum wage of £2,116.40 per month and/or £25,396.80 a year.
Carers Allowance
The carers allowance threshold has also been increased meaning carers can now earn the equivalent of 16 hours a week at minimum living wage without losing the benefit.
The Great British Pub
Perhaps the largest cheer in the House of Commons was the announcement of a 1.7% cut in draught beer duty. This equates to around 1p per pint.
Non-draught beer however saw an increase in line with RPI (Retail Prices Index) which measures inflation.
Fuel
Fuel Duty is another tariff which has been frozen and had a 5p cut in previous budgets to help with the rising costs of petrol and diesel. Today, the Chancellor announced that the fuel duty freeze and existing 5p cut the previous government put in place will be extended for a further 12 months.
Employers' National Insurance
One of the main headlines pre-budget was the rise in employer's national insurance. The chancellor announced a 1.2% increase from April 2025 making it 15%. In addition to this, the secondary threshold at which employers' national insurance becomes payable will be reduced from £9,100 to £5,000 per year.
To ease the financial burden of the increased employers national insurance, the Chancellor has also increased the Employment Allowance from £5,000 per year to £10,500 per year and are also removing the £100,000 threshold.
Capital Gains Tax
Another key headline pre-budget was the increase in Capital Gains Tax. The Chancellor announced increases to both the higher and lower rates with the lower increasing from 10% to 18% and the higher from 20% to 24%.
The existing lifetime limit of £1,000,000 Business Asset Disposal Relief is to stay with increases in the rate from its current 10% to 14% from April 2025 and 18% from April 2026.
Inheritance Tax
Inheritance Tax was another big headline in the media in the run up to the budget and the Chancellor announced that the nil rated bands frozen to April 2028 by the previous government would be maintained and extended to 2030:
£325,000 (£500,000 if it includes property passed to direct descendants) and £1,000,000 when passed to surviving spouse or civil partner)
From April 2027, inherited pensions will be included in inheritance tax (which was previously outside the scope of tax).
From April 2026, Agricultural and Business Property Relief will be reformed. The first £1,000,000 of combined agricultural and business property inherited will be tax free. Anything over £1,000,000 will be taxed with a 50% relief equating to a 20% effective tax rate.
The 50% relief and 20% effective rate will also apply to shares on the Alternative Investment Market & other similar markets)
Corporation Tax
In line with Labour's Manifesto, Corporation Tax for limited companies will remain capped at 25% with the small business relief still in place for smaller profits.
The Annual Investment Allowance for assets remains at £1,000,000, 'full expensing' is also to stay along with the Research & Development relief rates.
Electric Vehicles
The Chancellor announced today that the Company car tax incentives will be maintained from 2028 and there will be an increased differential between fully electric cars and others when it comes to the first year rates (vehicle excise duty) from April 2025.
Was there anything you’d hoped to see?
Was there anything you think was missing?
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