Budget Announcement

Chancellor Rachel Reeves has delivered Labour’s first Budget since 2010, after the party’s return to power in July’s general election.

We wanted to provide you with a summary of the most notable points that were made in yesterday’s speech.

Personal taxes

• Freeze on income tax and National Insurance thresholds to end in 2028, preventing people from being dragged into higher tax bands as their wages rise
• Capital gains tax paid on profits from selling shares to increase from up to 20% to up to 24% – rates on additional property sales to stay same
• Freeze on inheritance tax thresholds extended beyond 2028 to 2030

Housing

• Social housing providers to be allowed to increase rents above inflation under multi-year settlement
• Discounts for social housing tenants buying their property under the Right to Buy scheme to be reduced
• Stamp duty surcharge, paid on second home purchases in England and Northern Ireland, to go up from 3% to 5%
• Point at which house buyers start paying stamp duty on a main home to drop from £250,000 to £125,000 in April, reversing a previous tax cut
• Threshold at which first-time buyers pay the tax will also drop back, from £425,000 to £300,000
• Current affordable homes budget, which runs until 2026, boosted by £500m

Transport, alcohol, tobacco

• £2 cap on single bus fares in England to rise to £3 from January
• 5p cut to fuel duty on petrol and diesel, due to end in April 2025, kept for another year
• Commitment to fund tunnelling work to take HS2 high-speed rail line to Euston station in central London
• Commitment to deliver upgrade to trans-Pennine rail line between York and Manchester, running via Leeds and Huddersfield
• Air Passenger Duty on flights by private jet to go up by 50%
• Tax on tobacco to increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco
• Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation, but tax on draught drinks cut by 1.7%

Wages, benefits and pensions

• Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
• Rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a “single adult rate”
• Eligibility widened for the allowance paid to full-time carers, by increasing the maximum earnings threshold from £151 to £195 a week

Business taxes

• Firms to pay National Insurance on workers’ earnings above £5,000 from April, down from £9,100 currently, with the rate increasing from 13.8% to 15%
• Employment allowance – which allows companies to reduce their NI liability – to increase from £5,000 to £10,500
• Tax paid by private equity managers on share of profits from successful deals to rise from up to 28% to up to 32% from April
• Main rate of corporation tax, paid by businesses on taxable profits over £250,000, to stay at 25% until next election

UK debt, inflation and economic growth

• Office for Budget Responsibility predicts the UK economy will grow by 1.1% this year, 2% next year, and 1.8% in 2026
• Inflation predicted to average 2.5% this year, 2.6% next year, before falling to 2.3% in 2026
• Official definition of UK government debt loosened by including a wider range of financial assets, such as future student loan repayments

Government spending and public services

• Extra £22.6bn for day-to-day spending on the NHS in England, and a £3.1bn boost to budget for investment
• £6.7bn allocated for education investment next year, with £1.4bn earmarked for rebuilding over 500 schools

Source

BBC News (2024) Budget 2024: Key points at-a-glance. Available at: https://www.bbc.co.uk/news/articles/cdxl1zd07l1o[Accessed 30th October 2024].

All the information in this article is correct as of the publish date 31^st October 2024. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.

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