0116 222 0119 [email protected]

What the Autumn Statement 2024 means for you

Wednesday 30th October 2024 marked the first Labour Budget in 14 years, as the Chancellor announced her Autumn Statement. The Chancellor, Rachel Reeves, warned of the “difficult decisions” she would have to make. This was to fill a £40bn shortfall between government spending and the income they generate. These decisions were limited by Labour’s manifesto pledge not to increase taxes on “working people”. Despite some frustration over the definition of a ‘working person’, this broadly meant the Chancellor was unable to raise VAT, income tax or employees’ National Insurance contributions to raise funds.

The Labour government billed the Budget as “Fixing the Foundations to Deliver Change”. This is intended to spotlight the economy and shortfalls they have inherited, and promise a brighter future. There have been weeks of speculation in the media about what might be announced in the Budget. But what exactly was announced? In this article we’ll run through some of the key points from the Autumn Statement, including changes to employer National Insurance contributions, inheritance tax and Capital Gains tax.

Houses of Parliament viewed from across a London bridge, with a red double-decker bus in the foreground

Employer National Insurance contributions

Despite an election pledge not to increase taxes on working people, the government followed through with the much-speculated increase in employer National Insurance contributions. Amid the speculation, many small businesses felt they were safe in the knowledge they would be included in the term ‘working people’. However prior to the Budget, the government confirmed this would relate to the employee element of National Insurance not the employer element.

Currently, employers pay National Insurance on the earnings of their employees above £175 per week, at a rate of 13.8%. In the Autumn Statement, Rachel Reeves announced that the rate of employer’s National Insurance will increase by 1.2%, to 15% from April 2025. Contributions are not paid on employer contributions to workplace pensions.

The threshold from which employers must pay National Insurance will decrease from £9100 to £5000. In order to protect small businesses from this rise, the Chancellor has increased the Employment Allowance from £5000 to £10,500. This reduces the amount of National Insurance employers need to pay. The Chancellor asserts that this will mean 865,000 employers will not pay any employers National Insurance next year. A further 1,000,000 businesses will pay the same or less than they have paid previously.

Income Tax thresholds

The previous Conservative government froze the current income tax thresholds back in 2022. The freeze was set to be in place until March 2028, whereupon they would begin to rise again. The Chancellor announced in the Autumn Statement that there would not be an extension to this freeze. From April 2028, the tax thresholds will rise in line with inflation.

Many expected the thresholds to be frozen for longer, as this would lead to more income for the government, as workers’ pay rises. The raising of income tax thresholds again from 2028 will mean more take-home pay for workers.

Inheritance tax

The Conservative Party’s Autumn Statement in 2022 froze the inheritance tax rate of 40% on estates worth in excess of £325,000 until April 2028. There are exemptions to this, including tax on gifts given within seven years of an individual passing away.

The current situation means that no inheritance tax is due if the estate is valued at less than £325,000. In the Autumn Statement, the Chancellor announced the threshold for paying inheritance tax will be frozen for a further two years until 2030.

Rachel Reeves also announced that pensions will start to fall inside the estate for inheritance tax calculations from April 2027. As a result of this inclusion, the number of estates required to pay inheritance tax is likely to rise substantially from the current rate of approximately 6%. This could lead to more individuals choosing to draw down money from their pensions earlier, to avoid it being subject to inheritance tax. The major concern with this would be whether there will be sufficient funds left in pensions for the individual’s full retirement. This decision by the Treasury, therefore, will have a major impact on retirement planning, particularly as it is teamed with an extension to the threshold freeze until 2030. The detail of this portion of the Autumn budget is yet to be announced. We’ll bring you more information on this as it becomes known.

Capital Gains Tax

Capital Gains Tax (CGT) is charged on profit made from the sale of assets that have increased in value since their purchase. Despite speculation in the media that this would rise to 39% following the Autumn Statement, the Chancellor has instead increased standard rates from 10% to 18% for lower-rate taxpayers and from 20% to 24% for higher-or-additional-rate taxpayers.

Where a second property is concerned, there used to be a 3% surcharge which has now been increased to 5%. Therefore, upon the sale of a second property, a lower-rate tax-payer will pay 23% and a higher-or-additional-rate tax payer will pay 29%.

Stamp Duty Land Tax

Prior to the Autumn Statement, Stamp Duty Land Tax (SDLT) was set at 5% of the value of a property over £250,000 (or £450,000 for first-time buyers). An additional 3% is currently charged if the property is a second home. The Chancellor announced that the additional rate would increase by 2% to 5%, effective from Thursday 31st October 2024.

Close up of small house model on a table with a set of keys next to it

Fuel Duty

The levy on fuel was frozen between 2012 and 2022, before being cut by 5p in March 2022. This was in response to the spiralling fuel costs in a bid to lessen the impact on the cost of living, though some argue the saving wasn’t passed on to motorists at the pump. This reduction in fuel duty was set to be in place until March 2025. It was widely expected that the Chancellor would reverse this 5p cut. However she has acknowledged that the cost of living is still high. She has therefore maintained the freeze for a further year, until March 2026.

Set of fuel pumps at a petrol station

Non-domicile tax status

A non-domicile is a resident of the UK who has a permanent home outside of the UK. This benefits people as they do not have to pay UK income tax on money earned in another country. In the March 2024 Budget, then-Chancellor Jeremy Hunt announcement the abolition of the non-dom tax status, with some concessions. The Treasury have announced that they will continue with this plan, introducing a new “internationally competitive residence-based regime”. This will take place from April 2025.

Other announcements

The Chancellor also announced an increase to the National Living Wage, of 6.7% to £12.21 per hour. She also announced that carers will be able to earn £10,000 per year whilst receiving Carer’s Allowance. This equates to 16 hours per week of work paid at the National Living Wage.

We hope that this has helped you understand the announcements in the Autumn Statement, and how it will impact you. If you have any further questions, please don’t hesitate to contact us.

Get in touch with us

Subscribe to our Newsletter!