The 2024 UK Budget has arrived, bringing some significant changes to our economy. Chancellor Rachel Reeves has announced a range of measures aimed at addressing various sectors, from personal taxes to public services. Here are the key highlights:
Tax Measures:
Income tax rates and National Insurance contributions will remain unchanged, but thresholds will rise in line with inflation after 2028. Additionally, the basic rate of capital gains tax will increase from 10% to 18%, while the higher rate will rise from 20% to 24%. The inheritance tax threshold freeze has been extended to 2030, with less generous exemptions for farmland set to take effect in 2026. We’d also note that capital gains rates for Business Asset Disposal Relief (BADR) are scheduled to rise, moving up to 14% (from the current 10%) from 6 April 2025, and then further increasing to 18% from 6 April 2026.
Business Taxes:
From April, companies will pay National Insurance at a rate of 15% on salaries above £5,000, up from 13.8%. The employment allowance will increase from £5,000 to £10,500, and tax on private equity managers’ profits will rise from up to 28% to up to 32%. The main rate of corporation tax will remain at 25% for businesses with taxable profits over £250,000.
Wages and Benefits:
The legal minimum wage for those over 21 will increase from £11.44 to £12.21 per hour starting in April. Basic and new state pensions will rise by 4.1%, and the earnings threshold for the carer allowance will be raised from £151 to £195 per week.
Transport:
The 5p cut in fuel duty on petrol and diesel, originally brought in by the Conservatives, will be extended until April 2026. The cap on single bus fares in England will increase from £2 to £3 starting in January. Additionally, vehicle excise duty for non-efficient petrol cars will double in the first year.
Public Services Spending:
Day-to-day spending on the NHS and education in England is set to rise by 4.7% in real terms this year, with defence spending increasing by £2.9 billion next year. However, the Home Office budget will shrink by 3.1% this year.
Housing:
Social housing providers will be allowed to increase rents above inflation. The stamp duty surcharge for second homes will rise from 3% to 5%, and the threshold at which buyers start paying stamp duty on a main home will drop from £250,000 to £125,000 in April.
Economic Projections:
The Office for Budget Responsibility predicts the UK economy will grow by 1.1% this year and 2% next year, with inflation expected to average 2.5% this year.
This budget aims to navigate the current economic landscape while addressing critical needs across various sectors. For a more detailed analysis, we have attached the full summary for your review:
2024.10.31 – 2024 Budget Summary