The Autumn Budget 2024: Key Updates and What They Mean for You

The Chancellor’s Autumn Budget 2024 includes a host of financial updates that will affect individuals, families, and businesses across the UK. As always, we’re here to break down what these changes could mean for you. Here’s a quick and easy guide to the key points – and how they might impact your finances.

National Insurance Changes: What Employers and Employees Should Know

From 6 April 2025, employers will face an increase in National Insurance Contributions (NICs), with the rate going from 13.8% to 15%. Meanwhile, the threshold at which employers start to pay NICs will be reduced from £9,100 to £5,000.

For employees, there’s good news – the Chancellor confirmed that NICs and income tax rates will not increase. And starting in 2028/2029, personal tax thresholds will once again rise in line with inflation, providing some long-term stability for working people.

National Living Wage and Minimum Wage Increases

Starting April 2025, many workers will see an increase in their hourly rates:

National Living Wage (21+): up by 6.7% from £11.44 to £12.21.
18-20 Minimum Wage: increased from £8.60 to £10.
Apprentice Wage: raised from £6.40 to £7.55.

This boost is a positive step, especially for younger workers and apprentices, helping to ease the impact of rising living costs.

Inheritance Tax Threshold Frozen

The inheritance tax threshold freeze will continue until 2030. This means the first £325,000 of any estate remains tax-free, increasing to £500,000 if it includes a residence passed to direct descendants, and up to £1 million when passed to a spouse or civil partner. Starting April 2027, inherited pensions will also be subject to inheritance tax – a change that could affect how people approach estate planning.

Capital Gains Tax Rate Increase

There’s a change to the Capital Gains Tax (CGT) rates for asset sales. Effective 30 October 2024, the lower CGT rate will rise from 10% to 18%, and the higher rate will increase from 20% to 24%. Rates on residential properties remain at 18% and 24%. For those with assets like shares or second homes, this may mean reviewing investments with tax efficiency in mind.

State Pension to Rise

Pensioners will benefit from a 4.1% increase in state pensions starting April 2025:

The new state pension will rise from £221.20 to £230.25 per week.
The basic state pension will increase from £169.50 to £176.45 per week.

This change aims to help pensioners manage inflation, especially as living costs remain high.

Changes for ‘Non-Domiciled’ Residents

Starting April 2025, the UK will replace its current non-domicile tax rules with a new residence-based tax system. This will impact individuals whose primary home is outside the UK. The new system is intended to make tax contributions fairer while remaining competitive internationally, attracting talent to the UK.

Stamp Duty Land Tax Surcharge Increase

From 31 October 2024, the stamp duty surcharge for second homes, buy-to-let properties, and residential properties bought by companies will rise from 3% to 5%. Additionally, temporary residential stamp duty rates will end on 31 March 2025, with rates returning to previous levels in April 2025:

Residential Nil Rate Band: £125,000
First-time Buyers’ Relief threshold: £300,000, up to a maximum purchase value of £500,000.

These changes aim to ease first-time buyers’ property journey by reducing the competition in the housing market.

Fuel Duty Remains Frozen

To provide stability for motorists, fuel duty will stay frozen with the 5p per litre cut in place until 22 March 2026. This decision is designed to support those who rely on personal transport, particularly amid other rising costs.

Tobacco Duty Rises

In a move aimed at public health, tobacco duty will rise in line with the Retail Price Index (RPI) plus an additional 2%. Hand-rolled tobacco will see a 10% duty increase, and from 2026, a flat-rate duty on vaping liquids will take effect.

Draught Alcohol Duty Cut

Starting February 2025, the duty on draught alcohol will be cut by 1p per pint, giving pubs and hospitality businesses a boost. Non-draught alcohol products will see an increase in duty aligned with RPI, a move designed to support local pubs.

Bus Fare Cap Extended and Increased

The single bus fare cap, currently set at £2, will rise to £3 and will extend to December 2025. This cap keeps public transport affordable and accessible at a time when many are facing rising expenses.

VAT on Private Schools

From January 2025, private schools will face VAT on their fees, and business rate relief will end in April 2025. These changes align private schools’ tax treatment with other independent organisations, likely impacting fees for many families.

Carer’s Allowance Increase

The carer’s allowance will increase to match 16 hours at the national living wage, with carers able to earn over £10,000 per year without it impacting their benefits. This change recognises carers’ contributions and offers a bit more financial breathing room.

Employment Allowance to Go Up

Small businesses and employers will benefit from an increase in the Employment Allowance, moving from £5,000 to £10,500. With the £100,000 eligibility threshold removed, this will mean over 865,000 employers can operate NIC-free.

Air Passenger Duty Rises

Starting 2026/27, air passenger duty will see a small increase of around £2 for short-haul economy flights, while private jet flights will see a significant 50% increase, equivalent to £450 per passenger. These changes aim to encourage environmentally conscious travel choices.

Unclaimed Benefits Awareness

Did you know that many people miss out on government benefits because they don’t realise they qualify? You don’t have to be unemployed to be eligible for support, so it’s always worth checking. Government resources can help determine your eligibility, potentially adding support to your household finances.

If you’re keen to ensure your finances look healthier this year and beyond, why not view our range of financial products** If you’re curious about how the Autumn Budget could affect your finances or have questions about your financial plans, don’t hesitate to get in touch.

Here at Unity Mutual, we’re dedicated to helping you navigate your finances – ensuring that you’re prepared, informed, and ready for what’s next.

Until next time…

* Find the full Budget speech here

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