Autumn 2024 Budget Roundup

• The chancellor of the exchequer, Rachel Reeves, set out the new UK government’s budget to the House of Commons on Wednesday.
• The budget statement contained measures related to taxation and spending. 
• The Office for Budget Responsibility (OBR) also published its five-year forecasts for the economy and public finances.

The chancellor of the exchequer, Rachel Reeves, delivered the government’s budget statement to the House of Commons on Wednesday.

Mrs Reeves first updated members of parliament on the Office for Budget Responsibility’s (OBR) latest forecasts for the British economy. She stated that gross domestic product (GDP) growth is predicted to reach 1.1 percent in 2024, 2 percent in 2025, and 1.8 percent in 2026. She also reported that the government intends to maintain the Bank of England’s inflation target of 2 percent, with the headline rate expected to average 2.5 percent this year, 2.6 percent in 2025, and 2.3 percent in 2026.

Mrs Reeves then outlined the government’s short and long-term fiscal policies, including taxation and spending proposals. These policies, she explained, aim to foster economic stability and boost investment in both the public and private sectors.

To this end, the chancellor revealed plans to increase employer National Insurance contributions from 13.8 percent to 15 percent from April, while reducing the starting payment threshold from £9,100 per year to £5,000. She also confirmed that the freeze in income tax and national insurance thresholds will not be extended beyond 2028.

In addition, Reeves pledged to close various inheritance tax “loopholes” and raise the lower rate of Capital Gains Tax from 10 percent to 18 percent and the higher rate from 20 percent to 24 percent. Meanwhile, next spring, the National Minimum Wage will rise from £11.44 an hour to £12.21 for workers aged 21 and over and from £8.60 to £10 for those aged 18 to 20.

Other Key Measures

The chancellor also announced several other key measures:

• A £240 million ‘Get Britain Working’ package to fund employment, skills, and health support services for disabled people and those with long-term illnesses.
• Greater Manchester and the West Midlands will become the first mayoral authorities to receive integrated funding settlements starting in 2025.
• The current 75 percent discount to business rates, set to expire in April 2025, will be replaced by a 40 percent discount up to a maximum of £110,000.
• An increase in Capital Gains Tax rates on carried interest to 32 percent from April 2025 and further reforms from April 2026
• The current £2 cap on single bus fares in England will be replaced by a £3 cap until the end of 2025.
• An extension of existing tax incentives for electrical vehicles from 2028 and an increase in the difference between fully electric and other vehicles in Vehicle Excise Duty beginning in April 2025.
• Changes to the way that government debt is measured, shifting from underlying public sector net debt to public sector net financial liabilities (PSNFL), to allow for more borrowing to boost infrastructure investment.
• Increased investment in a range of industries, including £5 billion for housing, £1 billion for aerospace, £2 billion for the auto sector, £650 million for local transport, and £520 million for a new Life Sciences Innovative Manufacturing Fund.
• A £22.6 billion increase in the day-to-day health budget and a £31 billion increase in the NHS capital budget.

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