October 2024 budget - the changes announced
Posted on 29th November 2024 at 10:20
First labour budget 2024
Labour Chancellor Rachel Reeves presented her inaugural Budget at the end of October, marking the first time a female Chancellor of the Exchequer has done so. The Budget places the greatest financial burden on Britain's wealthiest individuals and businesses.
Starting in April next year, employers will face an increase in National Insurance (NI) contributions to address a £22 billion deficit attributed to the previous Tory government. Additional measures include adjustments to inheritance tax on farms passed down to the next generation, which has caused concern among British farmers, and changes to Capital Gains Tax (CGT) rates. Other measures include maintaining the freeze on the 5p reduction in fuel duty.
What do you need to know?
The majority of people will not see an immediate impact from the Budget measures. Personal income tax bands will stay frozen at their current levels until April 2028, so your immediate tax burden won't increase. However, as your income grows, you might enter higher tax brackets over time.
Capital Gains Tax (CGT) on profits from selling shares will rise from 10% to 18%, while the higher rate will increase from 20% to 24%. Meanwhile, CGT rates on selling property remain unchanged. You only pay CGT on properties that are not your main residence, with rates staying at 24% for property gains and income above the basic rate band, and 18% for anything below.
The Inheritance Tax (IHT) thresholds will also be frozen for another two years until 2030. From 2027 onwards, any unspent pension pots passed on to someone else will also be subject to IHT.
What about state pension and minimum wage?
Starting April 2025, the minimum wage for those over 21 will increase from £11.44 to £12.21 per hour, and for those aged 18 to 20, it will rise from £8.60 to £10 per hour. The long-term goal is to establish a single rate for all adults.
Thanks to the "triple lock" which aligns with the rise in average weekly earnings, the Basic State Pension will increase by 4.1% from April. This means the full new State Pension will go up from £221.20 to £230.25 per week.
Additionally, there will be an increase in the earnings threshold for the allowance paid to full-time carers. The maximum earnings threshold will rise from £151 to £195 per week.
Anything else?
There were several other announcements in the Budget. Starting in January, the £2 cap on single bus fares in England will increase to £3. The Government has also committed to funding the tunnelling work to extend the HS2 high-speed line to Euston station in London.
From 2026, Air Passenger Duty will rise by £2 for short-haul flights and by £12 for long-haul flights, with rates for private jets increasing by 50%. The Government has also pledged to "secure the delivery" of the TransPennine rail upgrade between York and Manchester, contradicting earlier reports of planned cost cuts.
An additional £500 million will be allocated next year for pothole repairs in England. To encourage the use of electric vehicles, Vehicle Excise Duty (car tax) will double in the first year.
Furthermore, a new tax of £2.20 per 10ml of vaping liquid will be introduced from October 2026. Tobacco will see a 2% above inflation rise, with hand-rolling tobacco experiencing a 10% above inflation increase. Tax on non-draught alcoholic drinks will rise by RPI inflation, while draught drinks will benefit from a 1.7% tax cut.
Contact us
This gives a small flavour of the changes announced in the Budget. If you want to find out anything else or are concerned you may have missed something that is relevant to you, then please get in touch with us and we will do whatever we can to help.
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