Chancellor promises to drive growth and raises £40 billion in taxes
30 Oct 2024
Chancellor Rachel Reeves pledged to 'invest, invest, invest' to drive growth and 'restore economic stability' in the Autumn Budget.
The Budget, which was Labour's first in over 14 years and the first ever delivered by a female Chancellor, saw £40 billion in tax announcements.
Ms Reeves repeated her claims that the government had inherited a £22 billion 'black hole' in the public finances from the Conservative Party.
Pre-Budget speculation had centred on the likelihood of increases to employers' National Insurance contributions (NICs), Capital Gains Tax (CGT) and Inheritance Tax (IHT).
The Chancellor announced an increase to the rate of employer NICs by 1.2 percentage points to 15% from 6 April 2025 for disposals from 30 October 2024. However, the Secondary Threshold - the level at which employers become liable to pay NICs on each employee's salary - will reduce from £9,100 per year to £5,000 per year.
CGT on non-residential assets will increase from 10% to 18% for those paying the lower rate and 20% to 24% for those paying the higher rate. These new rates will match the residential property rates. Business Asset Disposal Relief (BADR) and Investors' Relief will remain at 10% this year before rising to 14% from April 2025 and 18% from April 2026.
The IHT nil-rate band remains unchanged at £325,000, although from April 2027 inherited pension pots will be brought into the IHT net. The government says this will remove a 'distortion' which has led to pensions being used as a tax planning vehicle to transfer wealth rather than their original purpose to fund retirement.
From April 2026, agricultural property relief and business property relief will be reformed. The highest rate of relief will continue at 100% for the first £1 million of combined business and agricultural assets on top of the existing nil-rate bands, fully protecting the majority of businesses and farms. The rate of relief will reduce to 50% after the first £1 million.
The Chancellor also confirmed that VAT will be in on private school fees and abolishment of the non-dom tax regime.
Ms Reeves said she would protect living standards by unfreezing the thresholds on Income Tax and NICs from 2028 while she extended the cut in Fuel Duty for another year.
Ms Reeves said: 'The choices I have made . . . are the right choices to restore stability to our public finances, to protect working people, to fix our NHS and to rebuild Britain.
'That does not mean that these choices are easy, but they are responsible.'