The minimum wage for people aged 21 and over will rise
Chancellor of the Exchequer Rachel Reeves announced the 2024 Autumn Budget, which is Labour’s first Budget in 14 years.
In her opening comments, Reeves said the UK voted for change and the Labour government has a mandate for a decade of “national renewal”.
She pledged “more pounds in people’s pockets” and improved living standards, adding that the only way to drive economic growth is to “invest, invest, invest”.
Reeves said the government must “restore economic stability and turn the page on 14 years” of the Conservative government.
She said Labour has rebuilt the UK economy before and will “rebuild Britain once again”.
Taxes
The biggest announcement is that the Budget will raise taxes by £40 billion, with the bulk of it coming from employers’ national insurance (NI) contributions.
This will increase by 1.2 percentage points to 15% from April 2025.
The point at which employers start paying NI will fall from £9,100 a year to £5,000 a year. This will raise £25 billion per year.
The lower rate of Capital gains tax (CGT) on the sale of assets will increase from 10% to 18% while the higher rate will go from 18% to 24%. CGT on the sale of residential property will also increase from 18% to 24%.
Tax thresholds will rise, meaning the point at which people pay higher taxes will be increased. These tax bands had been frozen. But this freeze will end in 2028 and the bands will increase at the rate of inflation.
Benefits
Health and employment services for people who are disabled or who have long-term sicknesses will get £240 million in funding.
The minimum wage for people aged 21 and over will rise by 6.7% to £12.21 an hour, which is the equivalent of £1,400 a year for a full-time worker.
Workers aged 18 to 20 will see their minimum wage increase by 16.3% to £10 an hour.
People will now be able to earn £10,000 or more while claiming Carers Allowance. This will mean an extra £81.90 for those newly eligible.
The household support fund will receive £1 billion to help those in financial hardship with the cost of essentials.
Fuel Duty
The 5p fuel duty will be frozen until 2025.
Alcohol & Tobacco
There will be a 1.7% cut to draft alcohol duty, which could make drinks cheaper by 1p.
Meanwhile, the tobacco tax will rise at the rate of inflation plus an additional 2%. There will also be an extra 10% on rolling tobacco.
There will be a new flat rate duty on all vaping liquid from October 2025.
Education
VAT will be introduced on private school fees from January 2025 and business rates relief for private schools will be removed from April 2025.
Around 500 state schools that are not fit for purpose will be rebuilt, costing £1.4 billion.
There will be an extra £300 million for school maintenance each year, which will cover dealing with RAC concerns.
The budget for free school breakfast clubs will be tripled to £30 million, in 2025 and 2026. The core budget for schools will also rise by £2.3 billion in 2025.
A £300 million investment for further education and £1 billion for children with special educational needs (SEN).
Transport
During the Autumn Budget, the HS2 rail link between Old Oak Common, West London, and Birmingham was confirmed.
Tunnelling work will also begin on extending the line to London Euston.
Air passenger duty on private jets will rise by 50%, which is the equivalent of £450 per passenger.
Other
The price of soft drinks will rise, with an increase to the drinks levy in line with inflation every year. Nearly £1 billion a year will be raised thanks to the measure.
The Office for Budget Responsibility (OBR) predicts UK GDP growth to be 1.1% in 2024, 2.0% in 2025, 1.85% in 2026, 1.5% in 2027, 1.5% in 2028, 1.6% in 2029.
The OBR expects public sector net borrowing to be £105.6 billion in 2025-26, £88.5 billion in 2026-27, £72.2 billion in 2027-28, £71.9 billion in 2028-29 and £70.6 billion in 2029-30.
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