The Chancellor Rachel Reeves delivered Labour’s first Budget in over 14 years on October 30th, 2024. Before the announcement, we had a look at what was predicted to be discussed. Were the predictions correct?
In this article, we’ll summarise the key points the Chancellor delivered, comparing them against the predictions and discussing everything from the plan for the NHS to funding for education.
Prediction:
An increase in Capital Gains Tax to potentially align it more closely with income tax.
Announcement:
Rachel Reeves announced that the lower Capital Gains Tax rate will rise from 10% to 18%, while the higher rate rises from 20% to 24%.
Prediction:
Removal or reduction of certain Inheritance Tax reliefs, such as the residence nil-rate band.
Announcement:
The nil-rate band and residence nil-rate band were already set until 5th April 2028, but it was announced that they have now been frozen at their current level until the 5th of April 2030.
Prediction:
Pension tax relief adjustments including a rumoured flat rate of around 30% for everyone.
Announcement:
Specific changes to pension tax relief were not mentioned in this budget, so the current tax structure remains the same – 20% for basic rate taxpayers, and 40-45% for higher earners.
Prediction:
Changes to Council Tax including the removal of the single person discount, and a new flat rate Council Tax, based on a property’s value.
Announcement:
Despite earlier speculation, there were no changes announced to the Council Tax discounts, and the single person discount of 25% remains unchanged and in place.
Regarding the amendment of the Council Tax band system to introduce a new flat rate based on the value of a property, no announcements were made here either.
Prediction:
Increase to fuel duty.
Announcement:
The Government were reportedly considering an increase to fuel duty, however Rachel Reeves announced that fuel duty will remain frozen, extending the 5p cut (introduced in 2022) for another year.
Prediction:
Reforms for the Right to Buy scheme to ensure social housing isn’t depleted at the current rate.
Announcement:
This prediction was correct, with the Chancellor announcing that the Right to Buy Scheme will continue, but with reforms including reducing the maximum discount from 70% to 25%. In addition, local authorities will keep all receipts from Right to Buy sales and use this to reinvest back into social housing stock and new developments.
Prediction:
Reforms to Personal Independence Payments (PIP).
Announcement:
No official reforms to benefits, including PIP, were announced in the Budget, however announcements of reforms early next year have been alluded to.
Further key announcements
Outside of the predictions we’ve covered, there were also a number of key announcements from the Chancellor around education, the NHS, and Income Tax and National Insurance:
- From April 2028, the freeze on income tax and national insurance thresholds will end, and personal tax thresholds will increase in line with inflation.
- National Insurance contributions for employers will rise by 1.2% at the start of the next tax year, increasing to 15%.
- In April 2025, minimum wage will increase from £11.44 an hour to £12.21 an hour for those over 21, while those aged 18-20 will get a rise to £10 per hour. Apprentice wages will rise from £6.40 per hour to £7.55 per hour.
- There’ll be a £22.6 billion increase in the day-to-day health budget, to support the NHS in England to deliver an additional 40,000 elective appointments per week.
- A new “Fair Repayment Rate” was introduced, reducing the level of debt repayments that can be taken from a household’s universal credit payment each month from 25% to 15%.
- A £2.3 billion increase to the core schools budget was announced, which includes an extra £1 billion for special educational needs and disabilities. Additional funding has been marked for further education, and the Chancellor promised a big capital investment in the Department for Education, which includes funds to improve school maintenance and rebuild around 500 schools.
Overall, several anticipated announcements were confirmed in the Autumn Budget, with further predicted changes due to be announced in 2025. News of further funding for education and healthcare is sure to be welcomed by many, but changes to Capital Gains Tax, Inheritance Tax and National Insurance contributions for employers may spark some controversy.
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