Budget 2024: What you need to know?

Chancellor Rachel Reeves has just announced Labour’s first budget since 2010 from Downing Street. We update every important news of UK tax in our blogger. Here are the key takeaways of the Budget 2024: 

Personal Taxes

Chancellor Reeves stated, “if you make your home Britain, you need to pay tax too.” Here’s a look at changes for individual taxpayers:

• From April 2025, the non-domicile remittance basis will be removed, increasing tax complexity for new immigrants.
• Income tax and National Insurance (NI) rates, as well as VAT, will remain unchanged.
• Starting in 2028, income tax thresholds will adjust with inflation to prevent more people from entering higher tax bands as wages rise.
• Capital gains tax on share sales will increase from 10% to 18% at the basic rate, and from 20% to 24% at the higher rate.
• Inheritance tax thresholds remain frozen until 2030, with unspent pension pots becoming taxable from 2027.
• Farmland inheritance tax exemptions will be reduced from 2026.

Business Taxes

Employers should be prepared for changes primarily affecting small businesses and corporate tax:

• Employers will pay NI on employees earning over £5,000, reduced from the current £9,100 threshold, with a higher rate of 15%, projected to raise £25 billion annually.
• The Employment Allowance will increase from £5,000 to £10,500.
• The tax rate on private equity managers' share of profits will rise from up to 28% to up to 32% in April.
• The corporation tax rate for profits above £250,000 will stay at 25% until the next election.

Transport

• England’s bus fare cap will increase from £2 to £3 per single trip in January.
• The 5p fuel duty cut will be extended to April 2025.
• Funding is committed for a tunnel to bring HS2 to Euston station in central London.
• Plans are underway for upgrading the trans-Pennine rail route between York and Manchester, via Leeds and Huddersfield.
• Air Passenger Duty on private jets will increase by 50%.

Tobacco and Alcohol

• A new tax of £2.20 per 10ml of vape liquid will be introduced in October 2026.
• Tobacco tax will increase by 2% above inflation, with a 10% increase for hand-rolled tobacco.
• The tax on non-draught alcoholic drinks will follow the Retail Price Index, while draught drink tax will decrease by 1.7%.

Wages, Benefits, and Pensions

• The legal minimum wage will rise to £12.21 per hour for over-21s starting April.
• The rate for 18-20-year-olds will increase to £10, moving toward a unified adult wage.
• Full-time carers’ allowance threshold will increase from £151 to £195 per week.

Housing

• An additional £500 million is allocated for affordable housing up to 2026.
• Social housing providers can raise rents above inflation through multi-year settlements.
• The stamp duty surcharge on second home purchases in England and Northern Ireland will rise from 3% to 5%.

Economic Growth and Inflation

• The UK economy is expected to grow by 1.1% in 2024, 2% in 2025, and 1.8% in 2026.
• Inflation is forecast to average 2.5% in 2024, 2.6% in 2025, and drop to 2.3% by 2026.

Government Spending and Public Services

• An additional £22.6 billion is allocated for the NHS’s day-to-day spending in England, with a £3.1 billion boost for investments.
• Education investment next year includes £6.7 billion to rebuild over 500 schools.

Other Measures

• £11.8 billion will be allocated to compensate blood infection victims, with £1.8 billion for wrongly prosecuted Post Office operators.
• The government will stop taking surplus cash from the mineworkers' pension scheme.

At Elaga Accountancy, we’re here to guide you confidently through the evolving landscape of UK taxes and government regulations. Whether you’re an individual or a business, our expert team will help you navigate changes, stay compliant, and make informed decisions for a secure financial future.

***Contact us to learn more.

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