Breaking Down the 2024 Autumn Budget: Key Changes and What They Mean for You
Increased Infrastructure Investment
Reeves plans significant investment in infrastructure projects like roads, railways, and hospitals. A change in debt measurement allows for more borrowing to fund these projects, though day-to-day spending will still rely on tax revenue.
Employer National Insurance Hike
From April 2025, employer National Insurance contributions will rise from 13.8% to 15%, with the NI threshold for contributions lowered to £5,000. The Employment Allowance will increase, potentially exempting around 865,000 businesses from NI payments entirely.
End to Income Tax Threshold Freeze
Reeves ended the freeze on Income Tax thresholds beyond 2028, meaning thresholds will increase with inflation from 2028/29.
Capital Gains Tax Changes
CGT rates rose from 10% to 18% (basic rate) and 20% to 24% (higher rate). Business and Investors’ Relief limits were adjusted, with further rate increases planned for 2025 and 2026. Carried interest CGT will also increase, with reforms aligning it with Income Tax in 2026.
Inheritance Tax Reforms
The freeze on IHT thresholds was extended to 2030, and unused pension funds will now be part of an estate’s IHT from 2027. Changes also reduce reliefs for agricultural and business assets over £1 million.
ISA Limits Frozen
ISA subscription limits will stay at £20,000 until 2030, while the savings starting rate remains unchanged.
Business Rates and Corporation Tax
New business rates relief for retail and hospitality businesses will start in 2026, and Corporation Tax is capped at 25%.
National Living Wage Increase
The national living wage will rise to £12.21 per hour in 2025, benefiting over 3 million workers.
Fuel Duty and Stamp Duty Adjustments
Fuel duty remains frozen for another year, and the Stamp Duty surcharge on second homes and buy-to-let properties will increase from 3% to 5% from 31 October 2024.
Changes to Non-Dom Tax Rules
From April 2025, the non-domiciled tax regime will end, replaced by a residence-based system for temporary UK residents.
Other Announcements
VAT will be applied to private school fees from January 2025, and the £2 bus fare cap will rise to £3 in 2025. Alcohol duty will be slightly reduced for draught products, with a new vaping duty set for October 2026. Finally, State Pensions will increase by 4.1% in 2025/26.
These measures signify a shift towards greater public investment and revenue-raising, while preserving certain protections for lower and middle-income earners.
