Chancellor Rachel Reeves has delivered her highly-anticipated ‘tax and spend’ Autumn Budget.
For Labour’s first Budget in 14 years, Reeves announced £40 billion in tax increases – the biggest in a generation.
Here’s what it means for your personal finances and the environment.
Employers will pay higher national insurance
In what will be a big blow for owners of small businesses, national insurance (NI) contributions by employers will rise from 13.8 per cent to 15 per cent from April. The salary threshold from when employers must start paying NI will also fall from £9,100 to £5,000. These measures are expected to raise £25 billion.
Income tax threshold will go up – but not yet
Meanwhile, in a surprise move, personal tax thresholds on income tax and NI will rise in line with inflation – but not until the 2028-29 tax year.
Capital gains and inheritance tax to rise
The lower rate on capital gains tax will rise from 10 to 18 per cent, while the higher rate will rise from 20 to 24 per cent. The threshold for inheritance tax will be frozen, allowing £325,000 to be inherited tax free. Inheritance tax will also now be applied to pensions.
Minimum wage goes up
The “national living wage” – the legal minimum pay for over-21s – will rise by 6.7 per cent to £12. 21, amounting to £1,400 a year more for an eligible full time worker. For 18 to 20-year-olds, the minimum wage will rise from £8.60 to £10.
State pension to rise
The state pension will rise by 4.1 per cent from April. This means that next year’s full new state pension is set to reach £11,975.60 annually, an increase of £473.
Tax on vapes while a pints are a penny less
A tax will be introduced on vapes to bring them in line with tobacco and help curb their appeal to young people. Meanwhile draught duty will be cut by 1.7 per cent – equating to a penny off a pint in the pub.
Fuel duty frozen
The freeze on fuel duty has been extended for another year.
VAT added to private school fees
VAT will be brought in on private school fees in January 2025.
What about the environment?
11 green hydrogen production projects will benefit from funding support under the Hydrogen Business Model. Reeves allocated £125 million to Great British Energy, a new state-owned clean energy body to be based in Aberdeen. There will also be £134 million to support the delivery of port infrastructure for floating wind farms.
A further £3.9 billion has been earmarked in 2025/26 for the first carbon capture and storage clusters in the UK.
Oil and gas companies will have to pay more tax on their profits – up from 35 to 38 per cent. The 29 per cent investment allowance will also be removed.
Meanwhile, £3.4 billion has been allocated for the warm homes plan to upgrade older buildings and lower energy bills.
In a move welcomed by climate activists, there will be a 50 per cent rise in air passenger duty for private jet trips from 2027-28. This will make the tax on a single private jet trip from London to California around £450.
