Rachel’s Key Points in the Budget 2024

The first Labour’s Budget since 2010 after the party’s return to power in July’s 2024 General Election, delivered by the first female Chancellor Rachel Reeves

She started with hard point to many with announcing tax to rise approx. £40bn to fund the NHS and other public services like schools, transport, defence and few other departments.

What and where changes have been announced?

Personal Taxes

• Basic rate capital gains tax on profits from selling shares to increase from 10% to 18%, with the higher rate rising from 20% to 24%
• Exemptions when inheriting farmland remain the same but will change and will be less generous from 2026
• Income tax band thresholds to rise in line with inflation but the earliest after 2028, preventing more people being dragged into higher bands as wages rise
• Inheritance tax threshold freeze extended by further two years till 2030, with unspent pension pots also subject to the tax from 2027
• Rates of Income Tax and National Insurance (NI) paid by employees, and of VAT, to remain unchanged
• Rates on profits from selling additional property unchanged

Business Taxes

• Companies to pay NI at 15% on salaries above £5,000 from April, up from 13.8% on salaries above £9,100, what eventually will be raising in addition £25bn a year
• Employment allowance - which allows smaller companies to reduce their NI liability - to increase from £5,000 to £10,500
• Main rate of corporation tax, paid by businesses on taxable profits over £250,000 will remain unchanged 25% until the next election
• Tax paid by private equity managers on share of profits from successful deals to rise from up to 28% to up to 32% from April 2025

Wages, Benefits and Pensions

• Basic and new state pension payments to go up by 4.1% next year due to the "Triple Lock", more than working age benefits
• Eligibility widened for the allowance paid to full-time carers, by increasing the maximum earnings threshold from £151 to £195 a week
• Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April 2025
• Rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a "single adult rate"

Transport

• £2 cap on single bus fares in England to rise to £3 from January 2025, outside London and Greater Manchester
• 5p cut in fuel duty on petrol and diesel brought in by the Conservatives, due to end in April 2025, kept for another year
• Air Passenger Duty to go up in 2026, by £2 for short-haul economy flights and £12 for long-haul ones, with rates for private jets to go up by 50%
• Commitment to fund tunnelling work to take HS2 high-speed rail line to Euston station in central London
• Extra £500m next year to repair potholes in England
• The TransPennine rail will be upgraded between York and Manchester, but not before ministers check and look where is possibility to cut costs
• Vehicle Excise Duty paid by owners of all but the most efficient NEW petrol cars to double in their first year, to encourage shift to electric vehicles

Drinking and Smoking

• Government to review thresholds for sugar tax on soft drinks, and consider extending it to "milk-based" beverages
• New flat-rate tax of £2.20 per 10ml of vaping liquid introduced from October 2026, as ministers shelve Tory plans to link the levy to nicotine content
• Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation, but tax on draught drinks cut by 1.7%
• Tax on tobacco to increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco

Government Spending and Public Services

• £1.3bn extra funding next year for local councils, which will also keep all cash from Right to Buy sales from next month
• Day-to-day spending on NHS and education in England to rise by 4.7% in real terms this year, before smaller rises next year
• Defence spending to rise by £2.9bn next year
• Home Office budget to shrink by 3.1% this year and 3.3% next year in real terms, due to assumed savings from asylum system

Housing

• Current affordable homes budget, which runs until 2026, boosted by £500m
• Discounts for social housing tenants buying their property under the Right to Buy scheme to be reduced
• Point at which house buyers start paying stamp duty on a main home to drop from £250,000 to £125,000 in April 2025, reversing a previous tax cut
• Social housing providers to be allowed to increase rents above inflation under multi-year settlement
• Stamp duty surcharge, paid on second home purchases in England and Northern Ireland, to go up from 3% to 5%
• Threshold at which first-time buyers pay the tax will also drop back, from £425,000 to £300,000

UK Growth, Inflation and Debt

• Budget policies will increase UK borrowing by £19.6bn this year and by an average of £32.3bn over the next five years, according to the OBR
• Inflation predicted to average 2.5% this year, 2.6% next year, before falling to 2.3% in 2026
• Office for Budget Responsibility (OBR) predicts the UK economy will grow by 1.1% this year, 2% next year, and 1.8% in 2026
• Official definition of UK government debt loosened by including a wider range of financial assets, such as future student loan repayments

Other Measures

• £11.8bn allocated to compensate victims of the infected blood scandal, with £1.8bn set aside for wrongly prosecuted Post Office sub-postmasters
• Government to stop receiving surplus cash from pension scheme for mineworkers
• Extra spending in England:

       £3.4bn more for Scotland

       £1.7bn more for Wales and

       £1.5bn more for Northern Ireland

       All in devolution payments.