Introduction

The Autumn Budget 2024, delivered by Rachel Reeves, the UK’s first female Chancellor of the Exchequer, outlines Labour’s strategy for a “national renewal.” With promises to rebuild the economy, enhance public services, and improve living standards, Reeves has committed to raising £40 billion through various tax changes.

Reeves’s vision for Britain combines immediate support for households and businesses with targeted investments in health, education, and infrastructure, paving the way for a resilient and thriving future.

Dive into the key highlights of this transformative budget to see how it plans to impact every corner of British life.

1. Personal Income Tax

Key Details:

• Frozen Allowances and Thresholds: Main personal allowances and higher tax thresholds remain frozen until 2027/28, resuming adjustments in 2028/29.
• High Income Child Benefit Charge (HICBC): Households with high earners will continue facing benefit clawbacks starting at £60,000.
• Scottish and Welsh Rates: Scottish rates may increase, while Welsh rates align with UK thresholds.
• Dividend and Savings Allowances: The dividend allowance stays at £500, and savings rate bands remain steady.

Short Summary: Personal income tax changes focus on maintaining thresholds to avoid “bracket creep” while continuing existing policies on child benefits and allowances. Although direct tax changes are limited, freezes on thresholds may gradually increase tax burdens.

Expert’s View: The freeze on allowances aligns with Labour’s commitment to avoid raising personal taxes but also highlights the government’s reliance on indirect fiscal adjustments to manage funding needs.

2. Foreign-Domiciled Individuals

Key Details:

• Abolition of Non-Dom Status: From April 2025, non-domiciled individuals will be taxed on worldwide income, ending remittance basis options.
• Foreign Income and Gains (FIG) Regime: The new FIG rules will tax foreign earnings, with a four-year grace period for first-time residents.
• Inheritance Tax Changes: Overseas Workday Relief and asset exemptions for foreign-domiciled individuals will be restricted.

Short Summary: The abolishment of non-dom status aims to ensure all UK residents contribute fairly to national revenue, particularly high earners who previously benefitted from tax exemptions.

Expert’s View: This move to end non-dom benefits reflects Labour’s focus on tax fairness, though it may influence the UK’s appeal for international professionals and investors.

3. Changes Affecting Employees and Employers

Key Details:

• NIC Increases: Employers’ NIC will rise from 13.8% to 15%, and thresholds for contributions are lowered.
• Employment Allowance: Small businesses may claim an increased allowance of £10,500.
• Company Car and Double Cab Pick-Ups: Tax on company cars, especially non-electric, will increase, with restrictions on pick-ups used privately.

Short Summary: Adjustments to NIC and employment allowances aim to increase government revenue while providing some relief for smaller businesses, balancing public funding needs with employer capacity.

Expert’s View: The NIC hike may place pressure on businesses but shows Labour’s intention to secure substantial funds for public services. The increased Employment Allowance offers smaller businesses a critical buffer against higher NIC costs.

4. Social and Economic Reforms

Key Details:

• National Living Wage Increase: Wages rise by 6.7% to £12.21 per hour, benefiting full-time workers by about £1,400 annually.
• Levies on Tobacco, Alcohol, and Vapes: New taxes on tobacco and vapes align with public health goals, while a draught duty cut supports pubs.
• Fuel Duty Freeze: The freeze on fuel duty continues, alleviating costs for motorists amid rising living expenses.

Short Summary: Social reforms focus on easing the cost of living, promoting fair wages, and supporting public health, though some measures may affect small businesses and individual expenses.

Expert’s View: These measures reinforce Labour’s focus on equitable wages and support for public health. However, levies on tobacco and alcohol could pose challenges for industries reliant on these sectors.

5. Savings and Pensions

Key Details:

• ISA and Pension Limits: ISA contributions remain capped at £20,000, with no changes to pension lump sums or tax reliefs.
• CGT Changes: Capital Gains Tax rates increase, with additional reforms on carried interest.
• Business Asset Disposal Relief: Retained at £1 million, though rates are set to rise.

Short Summary: Labour’s savings and pension measures maintain existing structures while increasing CGT to raise additional revenue, impacting high-net-worth individuals more significantly.

Expert’s View: Freezing ISA limits preserves savings options, while CGT increases align with Labour’s focus on taxing wealthier individuals, possibly impacting investment choices.

6. Inheritance Tax (IHT)

Key Details:

• Thresholds and Relief Adjustments: The nil rate band remains at £325,000, with limited relief on agricultural and business assets.
• Pension Taxation: From 2027, pensions over £325,000 will be subject to IHT, reflecting changes for high-value estates.

Short Summary: The IHT changes aim to increase contributions from wealthier estates, aligning with Labour’s goal of targeting untaxed wealth while supporting equitable tax distribution.

Expert’s View: By maintaining the IHT freeze, Labour captures additional tax from estates indirectly, reflecting an approach that seeks to secure revenue without raising broad-based taxes.

7. Business and Corporation Taxes

Key Details:

• Business Rates Relief: Retail, hospitality, and leisure businesses will receive temporary relief, with permanent rate reductions set for 2026.
• Corporation Tax: Rates remain at 25% for large businesses and 19% for small firms, with extended expensing for equipment.
• Private School VAT: VAT on private school fees will begin in January 2025, raising costs for parents.

Short Summary: Business tax changes balance temporary relief with plans to raise VAT on certain private expenses, targeting additional revenue while aiding small businesses with equipment investment.

Expert’s View: Labour’s corporation tax policy aims to encourage reinvestment while ensuring large businesses contribute proportionally, reflecting a fair but growth-oriented tax stance.

8. Property Taxation

Key Details:

• Stamp Duty Land Tax (SDLT) and HRAD: HRAD surcharge rises from 3% to 5%, and temporary SDLT reductions end in March 2025.
• Annual Tax on Enveloped Dwellings (ATED): ATED will rise by 1.7%, impacting larger property holdings.

Short Summary: These property tax adjustments aim to curb speculation in the housing market while generating revenue from higher-value property transactions.

Expert’s View: Labour’s property tax increases reflect a focus on housing affordability and fairness, though they may impact high-value property markets.

9. Infrastructure and Green Energy Initiatives

Key Details:

• Transport Projects: Funding for the Transpennine Route and HS2 to London Euston, plus increased budgets for local road repairs.
• Green Energy: £3.4 billion for energy-efficient housing and the establishment of Great British Energy for renewable projects.

Short Summary: Labour’s infrastructure and green energy initiatives support sustainability and local development, aiming to reduce emissions and improve transport access.

Expert’s View: These measures signal Labour’s commitment to environmental goals and infrastructure improvements, paving the way for long-term benefits but requiring significant public spending.

10. Other Measures

Key Details:

• Making Tax Digital (MTD): Expands to smaller income brackets in April 2026.
• Compensation Schemes: Allocations include £11.8 billion for infected blood scandal victims and £1.8 billion for Horizon IT victims.
• Air Passenger Duty: Increased duty on private jets, with modest increases for economy flights.

Short Summary: Labour’s budget introduces tax reforms and compensation schemes, focusing on public accountability and fair contributions from wealthier individuals.

Expert’s View: The broader tax and compensation changes highlight Labour’s focus on public support and equitable tax distribution, addressing issues left unaddressed by previous administrations.

11. Public Accountability and Fiscal Outlook

Key Details:

• Inflation and Growth Projections: Inflation is forecasted to reach 2% by 2029, with gradual GDP growth over five years.
• Debt Reduction Goals: Labour aims for a budget surplus by 2027-28, with a new debt reporting rule for transparency.

Short Summary: Labour’s fiscal rules target debt reduction and inflation stability, promoting accountability and economic resilience in the long run.

Expert’s View: These fiscal targets align with Labour’s goal to achieve balanced public finances while supporting essential investments in public services and infrastructure.

Conclusion

Rachel Reeves’s Autumn Budget 2024 introduces wide-ranging reforms with a vision of revitalising Britain’s economy, supporting essential services, and driving sustainable growth. Through targeted tax changes, sectoral investments, and fiscal policies, Labour aims to shape a fairer, more resilient nation. Each measure reflects a careful balance between securing necessary revenue and maintaining public trust, setting the stage for a strong future for Britain.

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