First Labour Budget 2024 – The Changes Announced
Labour Chancellor Rachel Reeves delivered her first Budget at the end of October – which was also the first Budget ever delivered by a female Chancellor of the Exchequer, with Britain’s wealthiest people and businesses being asked to pay the most.
National Insurance (NI) payments made by employers are set to rise from April next year. Other measures include changes to the inheritance tax due on farms passed down to the next generation, which have caused consternation among Britain’s farmers, and changes to Capital Gains Tax (CGT) amounts, as well as various other measures such as a continued freeze on the 5p cut in fuel duty.
What do I need to know?
Many individuals will be no worse off as a direct result of the Budget measures. The personal income tax bands remain frozen at the same level until April 2028, which means you won’t pay more tax immediately. But as your earnings increase, you may be pulled into the higher tax bands, so it could impact you as time goes on.
Capital Gains Tax (CGT) on profits generated by selling shares will rise from 10% to 18% and the higher rate will rise from 20% to 24%. But the CGT rates on selling property will stay the same. You only pay CGT on a property that is not your main residence, and that rate stays at 24% for property gains and income above the basic rate band, and 18% for anything below this.
Inheritance Tax (IHT) thresholds have also been frozen for another two years until 2030, and from 2027, any pension pots that remain unspent and will be passed onto someone else will also become subject to IHT.
How about the State Pension changes, and the minimum wage?
The minimum wage for those over 21 is rising from £11.44 to £12.21 per hour from April 2025, and for 18-to-20-year-olds it will rise from £8.60 to £10 from the same period. The ultimate plan is to achieve a long-term move to a single rate for adults.
The Basic State Pension is rising by 4.1% from April thanks to the “triple lock” as this is the rise in average weekly earnings. This will increase the State Pension from £221.20 per week to £230.25 for the full new State Pension.
One other change was the increased eligibility for the allowance paid to full-time carers, by increasing the maximum earnings threshold from £151 to £195 per week.
Anything else that was announced?
There were many other things announced in the Budget, including that the £2 cap on single bus fares in England will rise to £3 from January. The Government has also committed to fund the tunnelling work to take the HS2 high speed line to Euston station in London.
Air Passenger Duty is set to go up by £2 for short haul flights and £12 for long haul flights from 2026, and rates for private jets will rise by 50%. The Government has also said it will “secure the delivery” of the TransPennine rail upgrade between York and Manchester, which contradicts reports that ministers were planning to cut costs.
An extra £500m will be set aside next year to repair potholes in England, and in a bid to push people towards using electric vehicles, Vehicle Excise Duty – the proper name for car tax – will double in the first year.
There will also be a new tax of £2.20 per 10ml of vaping liquid from October 2026, and there is a 2% above inflation rise on tobacco, and a 10% above inflation rise on hand-rolling tobacco. Tax on non-draught alcoholic drinks will rise by RPI inflation, but draught drinks will see a tax cut of 1.7%.
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.
