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Rachel Reeves delivered this Labour government’s first budget on Wednesday, confirming significant tax increase speculation to create investment into public services and working people. Read our key takeaways from the Chancellor’s budget.
Autumn Budget 2024 – Key Takeaways
Rachel Reeves delivered her much anticipated budget this week which sees notable tax increases while introducing reforms focused on funding public services. This is the first attempt of the Chancellor addressing the long-term fiscal challenges the UK faces, and while increases to income tax, National Insurance, and VAT are largely avoided, it will be businesses and wealth taxes that will contribute to raising necessary revenue for this new government. Here we summarise our key takeaways from the budget, and the potential impacts on finances for individuals and businesses.
Taxation and Personal Finances
- Income Tax, National Insurance, and VAT – There are no changes to income tax or National Insurance rates, with thresholds frozen until 2030. Individual Savings Accounts limits remain unchanged.
- Capital Gains Tax (CGT) – CGT rates will rise for share profits, with the basic rate moving from 10% to 18% and the higher rate from 20% to 24% for disposals made on or after 30 October 2024.
- Inheritance Tax (IHT) – IHT on inherited pension pots will no longer be exempt from 2027. While the freeze on IHT threshold has been extended to 2030, potentially bringing more estates into scope. Adjustments to certain inheritance reliefs for agricultural and business properties may also impact planning for these assets.
- Pensions – State pension payments, under the “triple lock” policy, will increase by 4.1%, delivering an additional £470 per year to pensioners. Highly anticipated changes to the tax-free cash withdrawal allowance did not materialise, meaning the tax-free cash option remains at 25% at retirement.
Business and Corporate Taxes
- Employer National Insurance Contributions – Employers will see an increase in NI contributions, rising by 2% from April 2025. Small businesses will have some support as the employment allowance increases to £10,500, however the increase remains a considerable expense potentially affecting payroll budgets, and benefits packages for larger employers.
- Private Equity and Wealth Taxes – The budget introduces higher tax rates on profits from private equity and additional relief restrictions on business asset disposal, which will be phased in through 2026.
- Stamp Duty – The stamp duty surcharge on additional homes will increase from 3% to 5%, impacting property investors and expecting to encourage first-time buyers.
This budget sets a new fiscal direction that will likely shape public finances and tax policies for the next decade. While higher earners and businesses are bearing more of a burden, increased government spending is overall positive for the economy. The new measures brought by the treasury underscore a need for expert financial advice. As always, our financial advisors are here to help you assess the budget’s potential impact and adjust your financial strategies accordingly.
October 2024
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All the above information is provided as information only and any examples used are not indicative of financial advice to address your particular requirements. The information does not constitute any form of advice or recommendation by Melville Independent plc, and is not intended to be relied upon by readers in making any financial decisions.
