The Chancellor Rachel Reeves delivered the new government’s first Budget on 30 October 2024 announcing tax rises worth £40bn. Below is a summary of all the key points.
Personal taxes
- Rates of income tax and National Insurance (NI) paid by employees, and of VAT, to will be unchanged
- Income tax band thresholds to remain the same until 2028 at which point they will rise in line with inflation after 2028
- Basic rate capital gains tax (CGT)on profits from the sale of assets including shares will increase from 10% to 18%, with the higher rate rising from 20% to 24%
- The current rates of CGT on residential property gains remain unchanged at 18% and 24%
- Inheritance tax threshold freeze extended by further two years to 2030, with unspent pension pots also subject to the tax from 2027. This means the first £325,000 can be inherited tax-free, rising to £500,000 if the estate is passed to direct descendants, and £1m if it’s passed to a surviving spouse or civil partner.
Business taxes
- National insurance (NI) contributions for employers will increase to 15% on salaries above £5,000 from April 2025, compared to the current rate of 13.8% on salaries above £9,100
- Employment allowance to increase from £5,000 to £10,500
- Tax paid by private equity managers on share of profits from successful deals to rise from up to 28% to up to 32% from April 2025
- Main rate of corporation tax will remain at 25% on taxable profits above £250,000 until the next election
Wages and pensions
- The minimum wage for over-21s to increase from £11.44 to £12.21 per hour from April 2025
- Rate for 18 to 20-year-olds to also increase from £8.60 to £10
- Basic and new state pension payments to increase by 4.1% next year due to the “triple lock”
Housing
- Stamp duty surcharge, paid on second home purchases in England and Northern Ireland, will rise from 3% to 5% from 31 October 2024
- Point at which house buyers start paying stamp duty on a main home to drop from £250,000 to £125,000 from April 2025
- Threshold at which first-time buyers pay the tax will also drop back from £425,000 to £300,000
Other key points
- VAT will be introduced on private school fees from January 2025 and schools’ business rates relief will be removed from April 2025.
- Fuel duty will be frozen this year and next, with the existing 5p cut maintained.
- Air Passenger Duty to go up in 2026, by £2 for short-haul economy flights and £12 for long-haul ones, with rates for private jets increase by 50%
- Vehicle Excise Duty paid by owners of all but the most efficient new petrol cars to double in their first year, to encourage shift to electric vehicles
- New flat-rate 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%
