Autumn Budget 2024: What You Need To Know
Today’s Autumn Budget 2024 is a significant milestone—it’s the first Budget presented by a Labour government since 2010 and the debut of Rachel Reeves as the first female Chancellor of the Exchequer. People were eager to hear what new tax and spending measures might be introduced. Labour laid out two main priorities:
Closing the Spending Gap: The Chancellor detailed plans to address a £40 billion gap in Whitehall’s daily budget. Including a £22 billion shortfall left by the previous Conservative government. Additional funding has also been earmarked for schools, hospitals, and defense.
Boosting Investment: A new rule will allow the Treasury to borrow up to £53 billion to fund a range of infrastructure projects. Reeves was clear: there would be “no return to austerity.”
Reeves opened her Budget speech to cheers from her Labour colleagues, with a focus on “restoring stability to our economy” and “starting a decade of national renewal” through “fixing the foundations and delivering change.”
Backing the words of Prime Minister Keir Starmer, Reeves emphasized that this change should be something people feel, like “more pounds in people’s pockets” and having an NHS they can depend on when it matters most. Her vision to “turn the page on the last 14 years” means a commitment to “invest, invest, invest” to rebuild Britain. She contrasted her approach with the previous government, saying that their spending plans had kept the real financial picture hidden, and that Labour’s goal is to bring back economic credibility. To address historical injustices, the Chancellor also set aside funds to compensate. Those affected by the infected blood scandal and the Post Office Horizon scandal.
Inflation: A Shift Away from Short-Term Thinking With inflation now down to 2% after spiking above 11% during the Cost of Living Crisis, Chancellor Reeves reported that the Office for Budget Responsibility (OBR) expects CPI inflation to average 2.5% this year. Going forward, inflation is forecasted at 2.6% in 2025, then gradually decreasing to 2.3% in 2026, 2.1% in 2027 and 2028, and back to 2.0% by 2029. This stable growth, she emphasized, signals a move away from short-term fixes and sets the stage for longer-term economic strength. The OBR has published a detailed outlook on Labour’s policies over the next decade, projecting real GDP growth to reach 1.1% in 2024, 2.0% in 2025, and then steadying at around 1.5%–1.6% from 2026 to 2029.
Cracking Down on Tax Fraud Under the “Making Tax Digital” initiative, Reeves pledged to modernize HMRC systems to tackle tax fraud. She laid out plans to curb abuses by some umbrella companies that exploit workers, pursue promoters of tax avoidance, and reduce unpaid tax debt— efforts expected to raise £6.5 billion. Additionally, HMRC will increase the interest rate on late tax payments to encourage timely compliance. To help tackle unemployment and ease pressure on the benefits system, the government will also publish a “Get Britain Working” white paper aimed at supporting unemployed individuals back into the workforce.
Minimum Wage Increase
With many struggling to make their paychecks stretch. Reeves announced a 6.7% rise in the National Minimum Wage, bringing it from £11.44 to £12.21 per hour starting next April. For 18–20-year-olds, the minimum wage will also go up, reaching £10 an hour. Changes to carers’ allowances will increase support as well. The allowance will now be calculated based on 16 hours at the National Living Wage, meaning a carer could now earn over £10,000 annually while still receiving this financial support, allowing them to “keep more of their money.” In addition, Reeves outlined Labour’s commitment to worker protections, including safeguards against unfair dismissal, protections against workplace bullying, and better access to maternity and paternity leave.
Fuel Duty Freeze Chancellor Reeves announced that fuel duty will be frozen next year, deciding against a proposed 7p per liter increase. Which she felt would be too heavy a burden for working people. She also confirmed that the current 5p cut will stay in place for another year, so drivers won’t see higher fuel taxes at the pumps.
Increase in State Pension Spending Reeves emphasized Labour’s commitment to ensuring retirees receive the pensions they deserve, acknowledging that “the people who powered our country deserve to be taken care of.” Spending on the state pension is set to rise by 4.1% in 2025-26, which will mean a £470 increase for over 12 million pensioners across the UK.
National Insurance To ease the tax burden on individuals, Reeves stated there would be no increases in National Insurance, VAT, or income tax for working people. Instead, employers will shoulder a small rise, with National Insurance contributions increasing from 13.8% to 15%. Additionally, the threshold for employer contributions will be lowered from £9,100 to £5,000. Small businesses, however, will get a boost, as the Employment Allowance will be raised from £5,000 to £10,500. This change will exempt about 865,000 small businesses from paying National Insurance. Allowing them to employ up to four full-time workers on the National Living Wage without facing National Insurance costs. Overall, over one million employers will see no increase or even a reduction in their National Insurance contributions.
Capital Gains Tax Adjustments The lower rate of Capital Gains Tax will go up from 10% to 18%, and the higher rate will rise from 20% to 24% for profits on non-residential assets. The tax rate on residential property remains unchanged, at 18% for the lower rate and 24% for the higher rate. From April 2025, rates on carried interest will increase to 32%, with further reforms planned for April 2026. For Business Asset Disposal Relief (BADR), the lifetime allowance will stay at £1 million. But the tax rate on these gains will increase from 10% to 14% in April 2025 and further to 18% in April 2026. Aligning it with the lower Capital Gains Tax rate on other assets.
Inheritance Tax Updates The inheritance tax threshold freeze has been extended until 2030, meaning estates worth up to £325,000 can still be passed on tax-free. This amount rises to £500,000 if a main residence is inherited by direct descendants. Up to £1 million when passing assets to a surviving spouse or civil partner. Looking ahead to 2027, Agricultural Property Relief. Business Property Relief will be reformed, bringing inherited pensions into the inheritance tax scope. Starting in April 2026, the first £1 million of combined business and agricultural assets will remain inheritance tax-free. For assets valued over £1 million, a reduced inheritance tax rate of 20% with 50% relief will apply.
Business Rates Update The current 75% discount on business rates, set to expire in April 2025, will be replaced by a 40% discount, with a cap of £110,000. While this still means an increase in business rates for many, it’s a more manageable adjustment, preventing rates from quadrupling.
Ending the Non-Dom Tax Regime Chancellor Reeves announced plans to abolish the non-dom tax regime. Which allows some UK residents with homes abroad to pay less tax. Starting in April 2025, it will be replaced with a residence-based system, designed to be internationally competitive yet fairer. This change is expected to generate £12.7 billion over the next five years.
Personal Tax Thresholds In a notable change, Reeves announced that personal tax thresholds will be adjusted for inflation starting in 2028-29, rather than remaining frozen. This adjustment, she explained, is aimed at protecting working people from losing more of their paychecks to tax.
Windfall Tax on Oil and Gas Profits The windfall tax on oil and gas profits will increase to 38%, expiring in March 2030. The government will also remove the 29% investment allowance to help the industry protect jobs and support the UK’s energy security.
Electric Vehicle Incentives The government will continue offering incentives for electric vehicles (EVs) in company car tax from 2028. Starting in April 2025, there will be a wider tax gap between fully electric vehicles and others, supporting EV adoption.
Additional Autumn Budget Highlights
Stamp Duty Increase: The stamp duty surcharge on second homes will rise from 3% to 5% starting tomorrow.
Tobacco Duty: Duty on hand-rolled tobacco will go up by 10%, and a flat-rate duty on vaping liquid will start in 2026. There will also be a one-time duty increase to encourage smoking cessation.
Air Travel Costs: Economy-class short-haul flights will see no more than a £2 increase. While private jet passengers will see a 50% rise in air passenger duty, or about £450 per passenger.
Alcohol Duty: Draft alcohol duty will be reduced, effectively lowering the price of pints in pubs.
VAT on Private School Fees: From January 2025, private school fees will be subject to VAT. Schools will lose their business rate relief starting in April 2025.
Education Investments Reeves outlined several education funding boosts, including:
Tripling investment in breakfast clubs.
Adding £2.3 billion to the core school budget for teacher hiring in critical subjects.
Increasing the special education needs budget by £1 billion.
Allocating £1.4 billion to rebuild 500 schools in greatest need and an extra £2.1 billion for school maintenance.
Providing £300 million for further education programs.
Defence and Veteran Support The Ministry of Defence will see an additional £2.9 billion, including a £3 billion annual commitment to support Ukraine. Funding will also cover commemorations for VE and VJ Days in 2026, honoring veterans and those who served.
Healthcare and the NHS A 10-year plan for healthcare reform will be introduced in the spring. Meanwhile, the NHS will receive a significant funding boost with a £22.6 billion increase for daily operations and £31 billion in capital spending. These measures aim to reduce waiting lists and expand healthcare capacity, marking the largest increase since the COVID-19 pandemic.
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