Here is a summary of the main announcements and new measures announced today by the Chancellor.

30 Oct 2024

 

On 30 October 2024, Chancellor of the Exchequer Rachel Reeves unveiled the Government’s fiscal plans to raise up to £40bn for public finances over the next five years.

The measures aim to “restore economic stability” and put “more pounds in people’s pockets”, according to the Chancellor, who added that she believed the only way to drive economic growth is to “invest, invest, invest”.

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Investment commitments

How individuals will benefit

Minimum wage

• The National Living Wage paid to over-21s will go up by 6.7% in April 2025 to £12.21, while the National Minimum Wage for 18 to 20-year-olds will see a 16.3% increase to £10.
• Apprentices will get the biggest pay bump, with hourly pay increasing from £6.40 to £7.55.

Bus fare cap

• The single bus fare cap applied to many routes in England will be raised to £3.
• It is an increase on the current limit of £2, which was introduced under the previous Conservative government and was due to expire in December.

State pension

• The state pension will rise by 4.1% to match the average earnings element of the triple lock. This means that next year's full new state pension is set to reach £11,975.60 annually, an increase of £473.

Fuel duty

• There will be a freeze on fuel duty in 2025 and the Chancellor has promised she will maintain the existing 5p cut for another year too.

Carer’s allowance tax

• Carers' allowance will increase from £81.90 per week to the equivalent of 16 hours at the National Living Wage per week. This allows carers to now earn over £10,000 a year whilst receiving the allowance.

Alcohol

• The duty rates on draught alcohol will be cut by 1.7%. Alcohol duty rates on non-draught products will increase in line with RPI from February next year.

How businesses and industries benefit

NHS

The Government are creating a 10 year plan in the Spring to enable a 2% productivity increase.

There will be £22.6bn increase in the operation budget, plus a £3.1bn increase to the capital budget which will fund repairs to buildings, new beds in hospitals, capacity for new diagnostics and other measures designed to bring waiting lists down to no longer than 18 weeks.

£6.7bn for the Department of Education in 2025

• A range of commitments aimed at giving every child the best start in life, supporting disadvantaged children, and investing in further education.
• Measures include increasing per pupil funding in real terms, funding towards supporting the special educational needs and disabilities (SEND) system and the continued expansion of government funded childcare. The rollout of free breakfast clubs in thousands of primary schools, this will also help parents stay in and return to work.

Electric Vehicles

• The Government is strengthening incentives to purchase electric vehicles (EVs) by widening the differentials in Vehicle Excise Duty First Year Rates between EVs and hybrids or internal combustion engine cars. The government is also maintaining EV incentives in the Company Car Tax regime and extending 100% First Year Allowances for zero emission cars and EV chargepoints for a further year.

40% relief for the Retail and Hospitality industries

• The government intends to introduce permanently lower business rates multipliers for high street retail, hospitality and leisure properties (RHL) from 2026-27. The small business multiplier will be also frozen.

Strategy defence review

• The defence budget will grow ensuring the UK comfortably exceeds the NATO spending target of 2% of GDP. The UK will modernise the Armed Forces through the nuclear deterrent, combat and surveillance aircraft, surface and submarine fleets, forward land forces, Special Forces and cyber and space capabilities. There will also be continued support to Ukraine, committing £3 billion per year for as long as it takes. Finally, commitment to fund commemorations in 2025 to remember those who gave their lives and honour those who served at home and abroad.

Local government increases

• The government is committed to returning to sustainability through a comprehensive set of measures to support local authorities in England, including increasing core spending power by around 3.2% in real terms in 2025-26, with £1.3 billion of new grant funding including at least £600 million new grant funding for social care.
• Investing in children’s services to put them on a sustainable trajectory, with a £1 billion uplift for SEND and alternative provision funding enables the Government’s ambition to reform the system. £233 million of additional spending in 2025-26 to prevent homelessness will help to prevent rises in the number of families in temporary accommodation and help to prevent rough sleeping.

More funding for devolved governments

• The devolved governments will receive £6.6 billion which includes £3.4 billion for the Scottish Government, £1.7 billion for the Welsh Government and £1.5 billion for the Northern Ireland Executive. This will enable critical investment into schools, housing, health and social care, and transport across Scotland, Wales and Northern Ireland.
• Additionally, the Government is providing the Welsh Government with £25 million to support essential work to keep disused coal tips maintained and safe. In Northern Ireland, the government is also providing £730,000 to support schools as they work towards integrated status, and a further £45.8 million for the Police Service of Northern Ireland’s Additional Security Fund and the Executive Programme on Paramilitarism and Organised Crime.

Long-term funding for growth-driving sectors

• £975 million for the aerospace sector over 5 years, over £2 billion over 5 years to support the automotive sector, and up to £520 million for a new Life Sciences Innovative Manufacturing Fund as part of the Industrial Strategy.

Taxation and generating income from individuals

Capital Gains Tax

• The lower rate of Capital Gains Tax will rise from 10% to 18%, and the higher rate from 20% to 24%.
• The rates on residential property will remain at 18% and 24%.
• Rates on carried interest will increase to 32% from April 2025.

Non-domicile tax status

• Abolition of non-domicile status from April 2025 and introduction of a residence-based regime.
• Individuals who opt-in to the regime will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence.
• The new residence based system for Inheritance Tax (IHT) will end the use of offshore trusts to shelter assets from IHT, and scrap the planned 50% reduction in foreign income subject to tax in the first year of the new regime.

Inheritance Tax

• Inheritance Tax threshold freeze extended to 2030.
• The government will reform agricultural property relief and business property relief from April 2026. In addition to existing nil-rate bands and exemptions, the 100% rate of relief will continue for the first £1 million of combined agricultural and business assets to help protect family farms and businesses, and will be 50% thereafter.
• The government will also reduce the rate of business property relief to 50% in all circumstances for shares designated as “not listed” on the markets of a recognised stock exchange.
• From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all, but for assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%.
• The government is removing the opportunity for individuals to use pensions as a vehicle for inheritance tax planning by bringing unspent pots into the scope of inheritance tax from April 2027.
• The government will invest £52 million to digitalise the inheritance tax service from 2027-28 to provide a modern, easy-to-use system, making returns and paying tax simpler and quicker

VAT on private schools

• VAT will be added to private school fees from 1 January 2025.
• Eligibility of private schools for charitable rate relief will be removed from April 2025.

Housing - Stamp duty second homes

• Increase to Stamp Duty land surcharge for second homes by 2% to 5% from tomorrow.

Tobacco and Vaping

• Tobacco taxes will rise by the Retail Price Index (RPI) measure of inflation as well as 2%.
• Hand-rolling tobacco duty will increase by 10%
• A new flat-rate duty on all vaping liquid from 2026

Air passenger duty

• Increase of no more than £2 for an economy-class short-haul flights.
• Increase on private jets by 50% - equivalent to £450 per passenger for a private jet.

Generating income from businesses and industries

Energy windfall tax

• Windfall tax will increase on oil and gas profits to 38% from 35% on 1 November and will now expire in March 2030.
• 29% investment allowance will be removed to ensure oil and gas industry can protect jobs and support the UK's energy security.

Employer NI contribution

• National Insurance contributions will rise from 13.8% to 15% from April 2025.
• Threshold at which businesses start paying National Insurance on a workers' earnings will be lowered from £9,100 to £5,000.
• The Employment Allowance will increase from £5,000 to £10,500 to help smaller businesses.