The Budget 2024 at a glance

Rachael Reeves, the first female UK Chancellor has just finished delivering her inaugural Budget speech to Parliament. The past couple of months have seen relentless speculation in the media regarding the expected increases in taxation and restrictions on public spending.

Changes in the 2024 Budget affecting individuals

Several changes will be introduced from 1^st April 2025 that will impact household finances:

Income Tax/NI

• The personal income tax threshold will remain until 2028, per the previous Budget.

National Living Wage

• The National Living Wage increases by 77p from £11.44 to £12.21 per hour. For someone working full time, or a 37.5 hour week, that equates to £23,873.60 a year, up from £22,368.06.
• For 18 to 20-year-olds, the minimum wage will rise from £8.60 to £10, increasing the annual wage from £16,815 to £19,552 for a full-time employee.
• The Apprentice minimum wage will rise from £6.40 to £7.55 an hour. This means their annual wage will go up from £12,513 to £14,762.

Carer’s allowance

• Carers allowance is increased, allowing carers to earn over £10K per year while receiving benefits.

VAT

• VAT will be levied on private school fees.

Capital Gains Tax

• The lower rate of Capital Gains Tax will rise from from 10% to 18%, and the higher rate from 20% to 24%.
• The rates on residential property will remain at 18% and 24%.

Inheritance Tax

• Inheritance tax threshold frozen until 2030.
• Inherited pensions will come into inheritance tax from April 2027.
• £1m allowance of combined business and agricultural assets. For assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%.

Non-dom tax

• Current non-dom tax regime is abolished.
• New residence-based scheme from April 2025 with internationally competitive arrangements for those coming to the UK on a temporary basis.

Stamp Duty Land Tax

• There will be an increase in the second home surcharge from 3% to 5%, effective from 31 October 2024.

Benefits

• In line with September’s inflation, benefits such as Universal Credit will increase by 1.7% from April 2025.
• A new ‘Fair Repayment Rate’ that will reduce the level of debt repayments that can be taken from a household’s Universal Credit payment each month, reducing it from 25% to 15% of their standard allowance.

Pensions

• Full new state pension increases by 4.1% from £221.20 to £230.27 per week.
• Pension credit standard minimum guarantee also up by 4.1%

Other measures

• Alcohol duty on non-draft products will increase in line with RPI. However, for draft products, there will be a reduction in duty equivalent to 1p for a pint.
• Duty rate on tobacco products increases by 2% above RPI inflation; hand-rolling tobacco and vaping liquid duties rise by 10%.
• Fuel duty is frozen for petrol and diesel in 2025.
• Soft drinks levy to increase by inflation.
• Air passenger duty increasing by £2 per short haul economy class flights. APD will increase by 50% for journeys on private jets.
• Bus fares capped at £3 until end of 2025.

Changes in the 2024 Budget affecting businesses

National Insurance

• Employers NI contributions will increase by 1.2% to 15% from April 2025.
• Reduced secondary threshold – the level at which employer’s pay NI for their employees – from £9,100 to £5,000.
• Employment allowances increase from £5,000 to £10,500.

Capital Gains Tax on business sales

• Business Asset Disposal Relief (formerly known as Entrepreneur relief) is maintained at £1m.

Business rates

• The current 75% discount to business rates – due to expire in April 2025 – will be replaced by a discount of 40% – up to a maximum discount of £110k for retail, hospitality and the leisure industries.

Windfall tax

• Increased gas & oil industry levy increased to 38% until March 2030, as well as removing the 29% investment allowance.
• 100% first year allowance and decarbonisation allowance are retained.

Infrastructure/investment projects

• Multiyear funding commitments – £1bn for the aerospace industry, £2bn for the automotive sector and up to £520m for a new life sciences hub.
• £25m of additional tax relief for visual effect costs in TV/film,
• Extend the innovation accelerators program in Glasgow, in Manchester, and in the West Midlands.
• Additional £500m to improve reliable fast broadband.
• 5bn for affordable housing including projects in Cambridge and Liverpool.
• Reduction in RTB discounts for those purchasing their council housing.
• Hundreds of new planning officers to reform planning and deliver housing plans.
• £1bn of investment to remove dangerous cladding.
• East/West rail to drive growth between Oxford, Bletchley and Milton Keynes.
• Improving capacity at Manchester Victoria station.
• Funding committed for the link on HS2 from Old Oak Common to Euston.
• Additional funding of £500m for road maintenance.
• £650m for local transport funding.
• £1.3bn for transport connectivity across several cities.
• 11 new green hydrogen projects across England, Scotland and Wales.
• £3.4bn over 3 years for warm housing schemes.
• Establish GB Energy in 2025 in Aberdeen.
• Additional funding of £6.7bn next year (19% real terms increase) for 500 schools rebuilding projects.
• Additional £2.1bn for school maintenance projects to deal with crumbling buildings.

Government forecasts and spending plans in the Autumn Budget 2024

Inflation target

• Remains at 2%.

Economic growth forecast

OBR – real GDP growth is forecast to be

• 1.1% in 2024
• 2.0% in 2025
• 1.8% in 2026
• 1.5% on 2027
• 1.5% in 2028
• 1.6% in 2029.

Health & Education

• £22.6bn increase in day-to-day spending budget for the NHS and £3.1bn for capital spending next year.
• £1.5bn for new beds in hospitals, new capacity for over a million diagnostic tests and new surgical hubs.
• Aim to bring waiting lists back to 18 weeks delivering 40,000 extra hospital appointments each week.
• Tripling investment in free breakfast clubs to £30 million in 2025-26.
• Core schools budget increasing by £2.3bn.
• Additional £300m for further education.
• SEND provision £1bn uplift in funding.

Defence

• Increase of £2.9bn for MOD budget.
• Military support of £3bn/year to Ukraine.
• Funding to commemorate 80^th anniversary of VE and VJ day in 2025.
• Further £2m for Holocaust education.

Housing, Social & Transport

• £1bn extension of the household support fund and housing payments to help those facing financial hardship.
• £1.3bn for additional grant funding for essential services.
• £600m for additional grant funding for social care.
• £230m for homelessness and rough sleeping.
• £25m for maintenance of coal tips in Wales.
• Additional £3.4bn for the Scottish Government.
• Additional £1.7bn for the Welsh Government.
• Additional £1.5bn for the NI Executive.

Compensation schemes

• 11.8bn for victims of the Infected Blood scandal.
• 1.8bn for victims of the Post Office Horizon scandal.

For more details of the Autum Budget 2024, visit the BBC Website.

Understanding the impact for your business

If you’re wondering how the Autumn Budget 2024 might affect your financial situation, we’ll be going through the fine print over the next few days so we can answer our clients’ questions. Adams Accountancy, the best accountants in Dartford, offers a free no-obligation chat about your situation, call us on 01322 250 001 today.