Budget 2024 – Key Points

Chancellor Rachel Reeves delivered her first budget in the Commons with a bold message: the UK must restore economic stability and turn the page on the last 14 years.

Emphasising a new direction, Reeves outlined measures that will raise taxes by £40 billion.

Here are the key points.

Personal Taxes

• Rates of income tax and National Insurance paid by employees to remain unchanged.
• Rates of VAT also remain unchanged.
• Income tax band thresholds to rise in line with inflation from 2028/29.
• Capital Gains tax rates increased from 10% to 18%, and from 20% to 24% for higher rate tax payers. This change takes place for disposals occurring on or after30/10/2024.
• CGT rates on selling residential property (other than Principal Private Residences) remain the same.
• Business Asset Disposal relief - £1m lifetime allowance remains. However, the current 10% CGT rate will be increased to 14% for 2025/26 and 18% for 2026/27 onwards.
•  Nil rate bands for IHT frozen for a further two years to 5/4/2030. These stand at £325,000 each Nil Rate Band and £175,000 each if leaving their main home to their children or grandchildren. The £175,000 is tapered off once the estate exceeds £2m.
• Any inherited pension funds will form part of estate for IHT purposes from 6/4/2027.
• Business Property Relief and Agricultural Property Relief will be restricted from 6/4/2026. If combined assets that qualify for these reliefs exceed £1m, then relief willonly be available at 50%, effectively meaning that IHT is charged at 20% on theseassets instead of the current rate of 0%.
• Non Dom Tax regime to be abolished as previously

Business Taxes

• Main rate of Corporation Tax remains unchanged at 25% until the next election.
• AIA Limit remains £1m for the duration of this parliament.
• Full expensing remains for the duration of this parliament, as do the current rates of R&D allowances.
• Employers National Insurance to increase from 13.85 to 15% from 6/4/2025.
• Secondary Threshold (i.e. the amount that can be paid before Employer’s National Insurance is charged) to reduce from £9,100 to £5,000 from 6/4/2025.
• Employment allowance to increase from £5,000 to £10,500 from 6/4/2025.

Transport

• 5p cut in fuel duty on petrol and diesel brought in by the Conservatives, due to end in April 2025, kept for another year
• £2 cap on single bus fares in England to rise to £3 from January
• Commitment to fund tunneling work to take HS2 high-speed rail line to Euston station in central London
• Commitment to deliver upgrade to trans-Pennine rail line between York and Manchester, running via Leeds and Huddersfield
• Air Passenger Duty on flights by private jet to go up by 50%

Alcohol & Smoking

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

Wages, Benefits & Pensions

• Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
• 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"
• Basic and new state pension payments to go up by 4.1% next year due to the "triple lock", more than working age benefits
• Other state benefits to increase by 1.7% from 6/4/2025.
•  Carer’s allowance can be claimed by a carer who earns up to 16 hours at the minimum wage from 6/4/2025, up from £7852 now.

Housing

• Current affordable homes budget, which runs until 2026, boosted by £500m
• 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% on Thursday

Other Changes

• Current lower rates for Benefit in Kind for electric vehicles to be extended beyond the current deadline of 2027/28. No further information has yet been provided relating to this.
• VAT to be charged on private school fees from January 2025
• HMRC late payment interest rates to increase. No further information has yet been provided relating to this.

Ben Wingate - Tax Manager - Brearley & Co

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