Following weeks of speculation, Chancellor Rachel Reeves delivered a budget that aims to put the public finances on a sustainable path while admitting there were difficult decisions to make on tax, welfare and spending.
In this article, we provide a summary of the 2024 Autumn Budget so you can see at a glance how it is likely to impact your finances.
Click on the links below for more information or scroll down to read the full article:
- Tax thresholds will increase in line with inflation from April 2028
- National Insurance for employers being increased from April 2025
- Inheritance Tax (IHT) changes
- VAT added to private school tuition fees from January 2025
- Non-Dom tax status to be changed
- Capital Gains Tax (CGT) increased from October 2024
- National Living Wage increased from April 2025
- Carer's allowance increased
- Pension changes for 2025/26
- Changes to Duty
Taxation
Tax thresholds will increase in line with inflation from April 2028
Income Tax and National Insurance thresholds used to rise every year with inflation; however, these were frozen in 2022 by the previous Conservative government with a view to them increasing again from 2028.
Freezing Income Tax and National Insurance thresholds ultimately results in people paying more Income Tax and National Insurance. Often referred to as 'Bracket Creep', freezing Income Tax and National Insurance thresholds means that as wages increase people move into higher tax brackets, increasing the average rate of tax that they pay.
Chancellor Rachel Reeves announced that the government will put an end to the freeze on personal tax thresholds, meaning these will be uprated in line with inflation from April 2028.
Employers' National Insurance being increased from April 2025
From 6th April 2025, the rate of National insurance that employers pay is being increased from 13.8% to 15%. Additionally, the employee earnings threshold at which employers start to pay National Insurance is being reduced from £9,100 per year to £5,000 per year.
It means that an employer paying an employee £33,700, which is the average regular UK wage, would have to pay around £910 more per year in National Insurance contributions.
How much will the increase in employers' National Insurance cost businesses?
| Employee annual salary | Additional Employer NI contributions (per month) from April 2025 | Additional Employer NI contributions (per year) from April 2025 |
| £20,000 | £62 | £746 |
| £25,000 | £67 | £806 |
| £33,700 (Average UK wage) | £76 | £910 |
| £50,000 | £92 | £1,106 |
| £75,000 | £117 | £1,406 |
| £100,000 | £142 | £1,706 |
Employment allowance to increase from April 2025
Employment allowance enables eligible employers to reduce their total employer National Insurance liability by the amount of the allowance. Chancellor Rachel Reeves announced that from 6th April 2025, the allowance will be increased from £5,000 to £10,500 and will now be open to all employers thanks to the removal of the £100,000 eligibility threshold. The increase in the allowance is intended to lessen the impact of the rise in employer National Insurance contributions on small businesses. In fact, the government estimates that approximately 865,000 employers will pay no employer's National Insurance contributions next year.
Inheritance Tax (IHT) changes
Chancellor Rachel Reeves announced a number of changes to inheritance tax (IHT), stating that the "government is making the inheritance tax system fairer by ensuring that wealthy estates contribute more to the public finances".
Inheritance tax thresholds had already been frozen until April 2028, however, this has been extended a further two years until April 2030.
Business and agricultural property relief is to be reformed from April 2026. In addition to existing nil-rate bands and exemptions, the 100% rate of inheritance tax relief that these assets currently receive will continue for the first £1 million of combined agricultural and business assets. This is designed to help protect family farms and businesses. However, beyond this, the relief will be set at 50%, meaning that beyond the first £1,000,000 exemption, inheritance tax will apply at a rate of 20%.
AIM shares will also be affected by reduction in Business Property Relief (BPR). The Chancellor has announced that the government will reduce BPR to 50% for all shares which are not listed on a recognised stock exchange, including AIM shares. This means that AIMs will attract IHT at 20% from April 2026.
From April 2027 onwards, unused pension pots and death benefits will form part of an estate for inheritance tax purposes. Under current rules, defined pension contribution pots can be inherited tax free should a person die before turning 75. If a person dies after they turn 75, pension pots are only liable for income tax by the beneficiaries who inherit them. The government estimates that this change alone could raise an additional £3.3bn for the Treasury by 2030.
For full details of all of the IHT changes announced read our complete guide to the Budget 2024 inheritance tax changes.
VAT added to private school tuition fees from January 2025
From 1st January 2025, private school tuition fees will be subject to VAT at the standard rate of 20%. This includes all education services and vocational training provided by a private school in the UK.
There were concerns over how the addition of VAT would impact families whose children attend private school due to special educational needs and the government addressed these concerns in its Autumn 2024 budget policy paper on the GOV.UK website. It states, "To support pupils with special educational needs that can only be met in a private school, local authorities and devolved governments that fund these places will be compensated for the VAT they are charged on those pupils’ fees. Private schools which are “wholly or mainly” concerned with providing full time education to pupils with an Education, Health and Care Plan will remain eligible for business rates charitable relief".
Non-Dom tax status to be changed
The government aims to close certain loopholes in the tax system for non-UK domiciled individuals. It has plans to introduce a new 'residence-based' system to ensure everyone who makes the UK their home pays their taxes here.
Explaining the planned changes, the policy paper states, "The government will legislate to abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler and internationally competitive residencebased regime, which will take effect from 6 April 2025. Individuals who opt-in to the regime will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence. From 6 April 2025 the government will introduce a new residence-based system for Inheritance Tax (IHT), ending the use of offshore trusts to shelter assets from IHT, and scrap the planned 50% reduction in foreign income subject to tax in the first year of the new regime".
Capital Gains Tax (CGT) increased from October 2024
Capital Gains Tax (CGT) is a tax that is payable on the gains made on the value of your assets over and above the annual allowance of £3,000. The tax you pay depends on the type of asset and whether you are a basic-rate taxpayer or a higher/additional-rate taxpayer. You also have an annual allowance of £3,000 before you need to start paying capital gains tax and this resets each year on a 'use it or lose it' basis. There had been speculation that this may be reduced or even scrapped ahead of the budget, however, the £3,000 CGT allowance was maintained.
For basic-rate taxpayers, the CGT rate payable on chargeable assets has been increased from 10% to 18% and for higher/additional-rate taxpayers it has been increased from 20% to 24%. The CGT payable on residential property remain unchanged.
We have summarised the changes in the tables below. For a more detailed explanation of the changes to Capital Gains Tax, read our article 'Capital Gains Tax rate increased in Budget – how will it affect you?'.
Basic-rate taxpayer CGT
| Type of Gain | CGT payable prior to Autumn Budget 2024 | New CGT Payable |
| Residential Property | 18% | 18% |
| All other chargeable assets (including investments) | 10% | 18% |
Higher/Additional-rate taxpayer CGT
| Type of Gain | CGT payable prior to Autumn Budget 2024 | New CGT Payable |
| Residential Property | 24% | 24% |
| All other chargeable assets (including investments) | 20% | 24% |
Business Assets Disposal Relief and Investor's Relief increasing
The rate for both Business Asset Disposal Relief (BADR) and Investor's Relief (IR) will rise to 14% from 6th April 2025 and will match the main lower rate of 18% from 6th April 2026. The increase is being applied in two phases to give business owners time to adjust to the changes and/or complete sales.
National Living Wage increased from April 2025
The National living wage for those aged 21 and over will be increased by 6.7% from £11.44 to £12.21 per hour from April 2025. In addition, the national minimum wage for 18-20 year-olds will be increased by 16.3% and the rate for under 18's and apprentices has increased by 18%.
We summarise the changes to the National Living Wage for April 2025 below.
- Rate for those over 21 increased by 6.7% - from £11.44 an hour to £12.21
- Rate for 18-20 year-olds increased by 16.3% - from £8.60 an hour to £10.00
- Rate for under 18's and apprentices increased by 18.0% - from £6.40 an hour to £7.55
Carer's allowance increased
The Carer’s Allowance 'weekly earnings limit' has been increased to the equivalent of 16 hours at the national living wage. This means that carers can now earn over £10,000 a year while still in receipt of carers allowance. It represents an increase of around £40 per week and will allow around 60,000 additional carers to access carer's allowance.
Pension changes for 2025/26
There had been speculation that pensions would be targeted as a means of plugging the much-published black hole in the UK public finances. The speculation included the possibility of:
- the maximum tax-free lump sum allowed from defined contribution pensions being reduced
- a flat tax relief on pension contributions being implemented
- defined contribution pension funds being included within a deceased's estate for inheritance tax purposes
Ultimately only the latter was officially announced.
In addition, the Chancellor confirmed that the triple lock rule has been honoured for the 2024/25 tax year meaning state pensions will rise by 4.1% in April 2025. Below, we explain how the rise could impact you.
State pension increase from April 2025
- Reached state pension age prior to 2016 - State pension will rise from £169.48 to £176.43 per week - a rise of £6.95 per week
- Reached state pension age after 2016 - State pension will rise from £221.20 to £230.30 per week - a rise of £9.10 per week
Pension credit increase from April 2025
From April 2025, the Pension Credit 'standard minimum guarantee' will also increase by 4.1%, meaning a rise of £465 per year for the single pensioner guarantee and £710 per year for the couple guarantee.
Duty
We have summarised the main changes to duty below.
Stamp Duty Land Tax (SDLT)
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From 31st October buyers will need to pay a 5% stamp duty surcharge on second homes and buy-to-let properties, up from 3%.
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For all non first-time buyers there was no extension to the current reduction on Stamp Duty on a property's value between £125,000 and £250.000. Currently there is no SDLT to pay on the property value under £250,000. This means that when the SDLT temporary reduction (holiday) ends on 31st March 2025 all buyers (except first-time buyers) will have to pay 2% on the portion of their property value between £125,001 to £250,000 which will equate to a total of up to £2,500 in SDLT.
- First-time buyers will still not have to pay SDLT on properties up to £425,000, and a discounted rate on property purchases up to £625,000 until 31st March 2025. After this date it remains the case that the SDLT-free threshold will rise from £425,000 to £300.000 and they will have to pay 5% SDLT on the portion of a property value from £300,001 to £500,000.
For more information on the Stamp Duty changes read our article "Budget 2024: Extra stamp duty on second homes increased to 5%".
Fuel Duty
- Temporary 5p cut to fuel duty extended for a further year
- The planned fuel duty increase in line with inflation for 2025/26 has been cancelled
Alcohol Duty
- Alcohol duty on draught products to be cut by 1 penny per 'average strength' pint
- Alcohol duty on non-draught products will rise by RPI in February 2025
Tobacco Duty
- All tobacco products to increase by RPI +2% from 6pm on 30th October 2024
- Hand-rolling tobacco will see an additional 10% increase this year to reduce the gap with cigarette duty
- A new 'Vaping Products Duty' is to be introduced from 1st October 2026 at a flat rate of £2.20 per 10ml vaping liquid. This will be accompanied by an equivalent further one-off increase in tobacco duty to maintain the financial incentive to switch from tobacco to vaping
Vehicle Excise Duty First-year rates
- The first-year rate for zero-emission cars has been frozen, meaning owners of zero-emission vehicles will pay just £10 per year until 2029/30
- First-year rates for cars emitting 1-50 g/km of CO2 (including hybrid vehicles) will increase to £110 for 2025/26
- First-year rates for cars emitting 51-75 g/km of CO2 (including hybrid vehicles) will increase to £130 for 2025/26
- All other first-year rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025/26
Air Passenger Duty
- Air passenger duty will increase for 2026/27. The increase equates to a £1 increase for a domestic economy class flight, a £2 increase for a short-haul economy class flight and a £12 increase for long-haul destinations
- The higher rate of air passenger duty which applies to larger private jets will rise by 50% for 2026/27
- From 2027/28 onwards, all air passenger duty rates will be uprated by forecast RPI and rounded to the nearest penny
Further reading
- What is the state pension triple lock?
- State pension to rise by up to 4.1% in April 2025
- A complete guide to the Cost of Living Payments
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