Budget 2024: What you need to know?

Chancellor Rachel Reeves has just announced Labour’s first budget since 2010 from Downing Street. Here are the key takeaways:

Personal Taxes

Chancellor Reeves stated, “if you make your home Britain, you need to pay tax too.” Here’s a look at changes for individual taxpayers:

• From April 2025, the non-domicile remittance basis will be removed, increasing tax complexity for new immigrants.
• Income tax and National Insurance (NI) rates, as well as VAT, will remain unchanged.
• Starting in 2028, income tax thresholds will adjust with inflation to prevent more people from entering higher tax bands as wages rise.
• Capital gains tax on share sales will increase from 10% to 18% at the basic rate, and from 20% to 24% at the higher rate.
• Inheritance tax thresholds remain frozen until 2030, with unspent pension pots becoming taxable from 2027.
• Farmland inheritance tax exemptions will be reduced from 2026.

Business Taxes

Employers should be prepared for changes primarily affecting small businesses and corporate tax:

• Employers will pay NI on employees earning over £5,000, reduced from the current £9,100 threshold, with a higher rate of 15%, projected to raise £25 billion annually.
• The Employment Allowance will increase from £5,000 to £10,500.
• The tax rate on private equity managers' share of profits will rise from up to 28% to up to 32% in April.
• The corporation tax rate for profits above £250,000 will stay at 25% until the next election.

Transport

• England’s bus fare cap will increase from £2 to £3 per single trip in January.
• The 5p fuel duty cut will be extended to April 2025.
• Funding is committed for a tunnel to bring HS2 to Euston station in central London.
• Plans are underway for upgrading the trans-Pennine rail route between York and Manchester, via Leeds and Huddersfield.
• Air Passenger Duty on private jets will increase by 50%.

Tobacco and Alcohol

• A new tax of £2.20 per 10ml of vape liquid will be introduced in October 2026.
• Tobacco tax will increase by 2% above inflation, with a 10% increase for hand-rolled tobacco.
• The tax on non-draught alcoholic drinks will follow the Retail Price Index, while draught drink tax will decrease by 1.7%.

Wages, Benefits, and Pensions

• The legal minimum wage will rise to £12.21 per hour for over-21s starting April.
• The rate for 18-20-year-olds will increase to £10, moving toward a unified adult wage.
• Full-time carers’ allowance threshold will increase from £151 to £195 per week.

Housing

• An additional £500 million is allocated for affordable housing up to 2026.
• Social housing providers can raise rents above inflation through multi-year settlements.
• The stamp duty surcharge on second home purchases in England and Northern Ireland will rise from 3% to 5%.

Economic Growth and Inflation

• The UK economy is expected to grow by 1.1% in 2024, 2% in 2025, and 1.8% in 2026.
• Inflation is forecast to average 2.5% in 2024, 2.6% in 2025, and drop to 2.3% by 2026.

Government Spending and Public Services

• An additional £22.6 billion is allocated for the NHS’s day-to-day spending in England, with a £3.1 billion boost for investments.
• Education investment next year includes £6.7 billion to rebuild over 500 schools.

Other Measures

• £11.8 billion will be allocated to compensate blood infection victims, with £1.8 billion for wrongly prosecuted Post Office operators.
• The government will stop taking surplus cash from the mineworkers' pension scheme.

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