Rachel Reeves’ 2024 Autumn Budget brings key changes across income taxes, benefits, and living cost support, designed to aid UK households amid inflationary pressures. Get in touch with us if you want to understand more about these changes and need help.
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Pension Increases: In keeping with the triple lock policy, state pensions will rise by 4.1% next year. This increase translates to a weekly boost for full new state pension recipients from £221.20 to £230.25, or an annual increase of £470.60. Pension credits for low-income pensioners will also increase, raising the standard minimum guarantee to £227.10 per week.
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Inflation-Linked Benefit Increases: With inflation slowing, most state benefits will increase by 1.7% in April 2024. Universal Credit’s allowance for single adults over 25 will rise by £6.69 monthly, while child benefits will go up by 40p for the first child. Carer’s allowance also sees a minor increase of £1.39 weekly, paired with a higher earnings threshold for claimants.
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Income Tax Adjustments: Reeves decided to unfreeze income tax thresholds beginning in April 2028. Previously frozen under a policy that created “fiscal drag,” the new adjustment will allow future tax bands to grow with inflation, ultimately keeping more post-tax income for earners.
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Inheritance Tax (IHT) Revisions: From April 2027, IHT will extend to certain pension funds, meaning that unspent funds left to anyone besides a spouse or civil partner could be taxed. In addition, assets like agricultural land and business property, currently IHT-exempt, will incur partial taxation above £1 million starting in April 2026.
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Stamp Duty on Additional Homes: Second-home buyers face an increased surcharge on stamp duty from 3% to 5%. By raising costs for these purchases, the government aims to redirect demand toward first-time buyers and owner-occupants, potentially increasing home accessibility.
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Capital Gains Tax (CGT): In an immediate change, CGT on share profits rises to 24% for higher-rate taxpayers and 18% for basic-rate taxpayers, aligning with property investment taxes.
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Minimum Wage Increase: The national minimum wage for workers aged 21 and over will increase by 6.7%, setting it at £12.21 per hour. Wages for younger workers and apprentices will see proportionate rises, providing an income boost for low earners.
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Fuel Duty: The budget freezes fuel duty, preventing a potential 7p per litre rise and saving costs for drivers.