Chancellor Rachel Reeves delivered her first Autumn Budget, which she said is “focused on our mission to grow the economy.” The Chancellor confirmed plans to raise taxes by £40bn with measures including increased Employers’ National Insurance Contributions and changes to the Capital Gains Tax system.
Autumn Budget 2024
The Chancellor, Rachel Reeves, pledged to put “more pounds in people’s pockets” and improve living standards. She also emphasised that the only way to drive economic growth is to “invest, invest, invest.” In her opening remarks, she said that the government must “restore economic stability” and will “rebuild Britain once again.”
Please visit the government’s website to read the full Autumn Budget 2024.
What were the key points at a glance?
National Insurance
Rachel Reeves stated that employees would not pay more directly. Instead, she announced a rise in Employer’s National Insurance Contributions by 1.2% to 15% from April. The government will also reduce a secondary threshold when contributions are due from £9,100 to £5,000. This measure is expected to raise £25 billion a year by the end of the forecast period.
Income Tax
The government will increase personal tax thresholds on income tax and national insurance in line with inflation from 2028-29.
Capital Gains Tax
The lower rate of capital gains tax will rise from 10% to 18%, and the higher rate will rise from 20% to 24%. However, the 24% capital gains rate imposed on second properties will not increase.
Inheritance Tax
The government will extend a freeze on the threshold for Inheritance Tax, allowing £325,000 to be inherited tax-free.
There will be tax raises worth £2bn from reforming reliefs for business and agricultural assets. After £1m, those assets will attract an inheritance tax of 20%.
From 6 April 2027, most unused pension funds and death benefits will be included in the value of a person’s estate for Inheritance Tax purposes, and pension scheme administrators will become liable for reporting and paying any Inheritance Tax due on pensions to HMRC.
National Living Wage
The National Living Wage for those over 21s will increase by 6.7% to £12.21, equivalent to £1,400 a year for an eligible full-time worker.
There will also be a single-adult rate phased in overtime to equalise pay for under-21s eventually.
Schools and education
VAT on private school fees will be introduced in January 2025.
The Chancellor has announced that the Department for Education will receive £6.7bn (a 19% real-terms increase), including £1.4bn to rebuild schools.
The schools’ budget will increase by £2.3bn to support teacher hiring. Funding for special needs will also increase by £1bn, and higher education will receive another £300m.
Housing
The government will spend £5bn on housing investment in 2025-26, including increasing the supply of affordable housing.
The stamp duty surcharge paid on second home purchases in England and Northern Ireland will increase from 3% to 5%.
Social housing providers to be allowed to increase rents above inflation under the multi-year settlement.
Business taxes
The government will permanently lower business rates for retail, hospitality, and leisure businesses from 2026-27. Until then, they will receive 40% relief on business rates up to a cap of £110,000.
The Employment allowance will be increased from £5,000 to £10,500, reducing national insurance for smaller businesses.
Taxes on carried interest, generally paid by private equity managers, will rise from 28% to 32% from April.
Non-dom tax regime
The concept of non-domicile residents will be abolished in April, and a new, residence-based scheme will be introduced.
NHS
Chancellor Rachel Reeves has promised a 10-year plan for the NHS to be announced in the spring to target 2% productivity growth next year.
A £22.6bn increase in the day-to-day health budget and a £3.1bn increase in the capital budget have been announced. That includes £1bn for repairs and upgrades and £1.5bn for new hospital beds and testing capacity.
Targeting tax avoidance
The Chancellor announced that the government will raise £6.5bn through targeting tax avoidance, including by umbrella companies.
Public spending and investment
There will be a 1.5% increase in real spending on government departments and 1.7% when including capital spending.
The Chancellor announced that more public investment is needed in the UK, and a new rule will be implemented to target debt falling as a share of the economy. Debt will be measured as public sector net financial liabilities, recognising benefits from investments and will apply in 2029-30.
Government research and development spending will reach £20.4bn in 2025-26, including £6.1bn in sectors such as medical science, engineering, and biotechnology. The government will also invest £2bn in automotive to support electric vehicles, £1bn in aerospace, and £500m in life sciences.
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