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A summary of the announcements in the 2024 Autumn Budget and an overview of the latest economic forecasts
UK Parliament writes:
The Chancellor of the Exchequer, Rachel Reeves, presented her 2024 Autumn Budget to Parliament on 30 October and published supporting documents on the gov.uk website. She is the first woman to deliver a UK Budget. This is the Labour Party’s first Budget for more than 14 years.
When the Chancellor finished her statement in the Commons, the Office for Budget Responsibility (OBR) published updated forecasts for the UK’s economic and fiscal outlook. The OBR is the independent public finances watchdog that produces the official forecasts for the economy and public finances used by the Chancellor.
The Chancellor has increased government spending by around 2% of GDP a year, on average, over the next five years. One-third of the additional spending will go on government’s investment spending on things such as transport, housing, and research and development (R&D). The remaining two-thirds will go on government’s day-to-day spending.
Half of the increase in spending is funded through an increase in taxes, mainly through higher employer National Insurance contributions (NICs) and capital taxes. The remaining half is funded largely through additional borrowing. The Chancellor said the Budget is ‘restoring stability to our public finances and rebuilding our public services’ and restoring ‘economic stability’.
Selected tax announcements
- Employer NICs
The employer NICs rate will be increased from 13.8% to 15% from April 2025, when the threshold above which employer NICs is paid will additionally be reduced from £9,100 a year to £5,000 a year. For some employers, increases will be at least partly mitigated by increases to the employment allowance. The employment allowance allows employers to reduce the total amount of National Insurance they pay per year.
- Capital taxes
The main rates of capital gains tax will increase from 30 October 2024. The Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) rates will increase in April 2025 and April 2026.
- Inheritance tax will apply to pension wealth that is transferable at death (unused pension funds and death benefits) from 6 April 2027. There will be changes to how agricultural property relief (APR) and business property relief (BPR) work for inheritance tax.
- Manifesto commitments
Various tax measures from Labour’s manifesto were confirmed, including applying VAT to private school fees, increasing the energy profits levy and changing the residence-based regime (which is already set to replace the ‘non-dom’ regime).
- Other announcements
The Budget includes compensation payments to victims of the Post Office Horizon IT and infected blood scandals. An additional £1.8 billion in total has been set aside for the Horizon scandal (for 2024/25 to 2026/27) and £11.8 billion in total for victims of the infected blood scandal (for 2024/25 to 2029/30)
- The Chancellor announced that the Carer’s Allowance weekly earnings limit will be increased from £151 per week in 2024/25 to £196 in 2025/26.
- Various measures to tackle fraud and error in the welfare system were announced, including additional staff to work on fraud and error across the Department for Work and Pensions (DWP) and HMRC, and expanding the DWP’s debt recovery powers in cases of fraud and error. The government also increased spending to help spot incorrect Universal Credit claims and to verify changes in Universal Credit claims.
- There will be a reduction on discounts under the housing Right to Buy scheme and councils will be able to keep all receipts generated by sales. £500 million will be contributed to the Affordable Homes Programme for 2025/26.
- The government will make investments in infrastructure including through the National Wealth Fund.
