Almost four months after Labour won the general election, chancellor Rachel Reeves has delivered her 2024 Autumn Budget, outlining the government’s plans for this tax year and beyond.
Arguing that the July general election had given Labour a “mandate to restore stability and start a decade of renewal”, Reeves described it as “a Budget to fix the foundations and deliver change”.
Against a backdrop of a manifesto pledge not to increase Income Tax, employee National Insurance, or VAT, Reeves also announced that her Budget would raise taxes by £40 billion, stating that any other chancellor would “face the same reality”.
Read on for a summary of some of the key measures and announcements from this year’s Autumn Budget –and what they might mean for you.
Confirmation of the 4.1% increase to the State Pension under the triple lock
The basic and new State Pension will increase by 4.1% in 2025/26, in line with earnings growth, meaning over 12 million pensioners will receive up to £470 a year more.
Changes to some Inheritance Tax reliefs
As expected, the chancellor made key announcements that could affect estate planning.
Nil-rate bands
The freeze on IHT thresholds will be extended by an additional two years, to 2030. The nil-rate band will remain at £325,000, with residence nil-rate band at £175,000.
Pensions
Reeves announced she was closing the “loophole” that gives pensions preferable IHT treatment. She will bring unused pension funds and death benefits payable from a pension into a person’s estate for IHT purposes from 6 April 2027.
The government estimates this measure will affect around 8% of estates each year.
Agricultural Property Relief
Currently, individuals can claim up to 100% relief on agricultural property (land or pasture that is used to grow crops or rear animals).
From 6 April 2026, the first £1 million of combined business and agricultural assets will continue to attract no IHT at all. However, for assets above this threshold, IHT will apply with 50% relief.
Business Property Relief
From 6 April 2026, the government will also reduce the rate of Business Property Relief from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of a recognised stock exchange, such as the AIM (Alternative Investment Market).
Capital Gains Tax reforms
The chancellor announced several changes to the Capital Gains Tax (CGT) regime.
As of 30 October, Capital Gains Tax (CGT) rates have increased immediately, with the basic rate rising from 10% to 18% and the higher rate from 20% to 24%.
The lifetime limit for Business Asset Disposal Relief (BADR), previously known as Entrepreneurs' Relief, remains at £1 million, while the Investors' Relief (IR) lifetime limit has been cut from £10 million to £1 million. The CGT rate for BADR and IR will stay at 10% for now but is scheduled to increase to 14% on 6 April 2025 and 18% on 6 April 2026. These changes are projected to raise £2.5 billion annually by the end of the forecast period.
Furthermore, CGT on carried interest – paid by private equity managers – will rise from 18% (basic rate) and 28% (higher rate) to 32% from 6 April 2025. There will be further reforms from April 2026 to bring carried interest within the Income Tax framework, under bespoke rules.
ISA subscription limits frozen until 2030
The Budget confirmed that annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2030.
Additionally, in the 2025/26 tax year, individuals with employment or pension income below £17,570 can earn up to £5,000 in savings interest tax-free, thanks to the retained starting rate for savings.
An end to the freeze on Income Tax thresholds from 2028
Back in 2021, the then-chancellor, Rishi Sunak, raised the Personal Allowance to £12,570 and the higher-rate Income Tax threshold to £50,270, with increases of £70 and £270, respectively.
Importantly, he also fixed these thresholds until 2026. Then, in the 2022 Autumn Statement, Jeremy Hunt extended this freeze until 2028.
Unexpectedly, Reeves decided against extending the freeze beyond 2028. From 2028/29, personal tax thresholds will be uprated in line with inflation once again.
A rise in employer National Insurance contributions
Reeves increased employer National Insurance (NI) rates by 1.2% from 13.8% to 15%, effective 6 April 2025. Currently, employers pay NI only above a threshold of £9,100 a year. The chancellor reduced this threshold to £5,000 a year, effective 6 April 2025.
From 2025, the Employment Allowance will rise from £5,000 to £10,500 and the £100,000 eligibility threshold will be removed so that all eligible employers now benefit.
A change to business rates relief
The chancellor announced that, from 2026/27, permanently lower tax rates will be introduced for retail, hospitality and leisure properties, and some will receive 40% relief on their bills, up to a cash cap of £110,000 per business.
Corporation Tax capped at 25%
The government plans to support businesses to invest by publishing a Corporate Tax Roadmap. This confirms that the government will cap Corporation Tax at 25% for the duration of the parliament.
A rise in the national living wage
Reeves announced a 6.7% rise in the national living wage for workers aged 21 and over, from £11.44 to £12.21 an hour, effective April 2025, and from £8.60 to £10 an hour for workers aged 18 to 20. Apprentices will receive the biggest pay increase, with hourly pay rising from £6.40 to £7.55 an hour.
A freeze in fuel duty
Fuel duty has been frozen since 2011, and the 5p cut brought in by the Conservatives in 2022 has been extended at every subsequent Budget. Reeves confirmed the freeze for another year and extended the 5p cut, saving the average motorist £59 in 2025/26.
Second home Stamp Duty surcharge increasing
With effect from 31 October 2024, the Stamp Duty surcharge on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property in England and Northern Ireland will increase from 3% to 5%. This surcharge is also paid by non-UK residents purchasing additional property.
VAT on private school fees from January 2025
From 1 January 2025, VAT will apply to all education, training, and boarding services provided by private schools. Additionally, the chancellor announced that she was removing business rates relief from private schools from April 2025.
In closing, we understand that the recent budget changes may raise concerns, and we urge you to remain calm and thoughtful in your decisions. If you have any questions or need guidance, please don't hesitate to reach out to your financial planner. We're here to support you through these changes.
Please note
All information is from the Autumn Budget documents on this page.
The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.
