UK
Budget 2024: The main announcements in Chancellor Rachel Reeves’s speech
Chancellor Rachel Reeves has finally unveiled the budget for 2024. Here are the key points:
• The budget will raise taxes by £40bn.
• National insurance (NI) contributions for employers (not employees) will increase by 1.2 percentage points to 15% from April 2025.
The point at which employers start paying NI will fall from £9,100 a year to £5,000 a year. This will raise £25bn per year.
• The lower rate of capital gains tax (CGT) on the sale of assets will increase from 10% to 18%. The higher rate will go from 18% to 24%. CGT on the sale of residential property will also increase from 18% to 24%.
• Tax thresholds will rise in the future, meaning the point at which people pay higher taxes will be increased. These tax bands had been frozen. But this freeze will end in 2028 and the bands will then increase at the rate of inflation.
• The freeze on inheritance tax will continue for a further two years until 2030. This means the first £325,000 can be inherited tax-free, rising to £500,000 if the estate is passed to direct descendants, and £1m if it’s passed to a surviving spouse or civil partner.
• From tomorrow, the stamp duty surcharge for second homes, or ‘higher rate for additional dwellings’, will increase by two percentage points to 5%.
• Health and employment services for people who are disabled and long-term sick will get £240m in funding.
• The minimum wage will rise by 6.7% to £12.21 an hour for people aged 21 and over. This is the equivalent of £1,400 a year for a full-time worker. Workers aged 18 to 20 will see their minimum wage increase by 16.3% to £10 an hour.
• People will now still be able to claim carers allowance while earning more than £10,000 a year (the equivalent of 16 hours work a week). This will mean an extra £81.90 a week for those newly eligible.
• A new fair repayment rate will mean Universal Credit claimants who have been accidentally overpaid will only have to pay back 15% of their allowance each month, falling from 25%. This means a gain of around £420 a year for roughly 1.2 million of the poorest households.
• The maximum amount allowed in an ISA (individual savings account) will be frozen at £20,000 until 2030.
• The household support fund will receive £1bn to help those in financial hardship with the cost of essentials.
• An increase in employment allowance from £5,000 to £10,000 will mean 65,000 businesses won’t pay any national insurance at all next year. It will also mean more than a million businesses will pay the same or less than they did previously.
• Business rates relief will fall from the current 75% down to 45% for retail, leisure, and hospitality businesses.
• The day-to-day NHS budget will increase by £22.6bn. There will also be a further £3.1bn investment in its capital budget for facilities and equipment.
• This will facilitate 40,000 extra hospital appointments and procedures every week and will include £1.5bn for new hospital beds.
• Local government will receive funding worth “at least” £600m for social care.
• An investment of £5bn in housing, which will increase the affordable homes programme to a budget of £3.1bn.
• In addition, £1bn will be spent on the removal of dangerous cladding, implementing the findings of the Grenfell inquiry.
• The ‘right-to-buy’ discount on people buying their council properties will fall and councils will be allowed to keep the full amount from sales.
• Fuel duty will be frozen this year and next, with the existing 5p cut maintained.
• A cut to draught alcohol duty of 1.7%, which could make drinks in pubs bought on draught cheaper by 1p.
• The tax on tobacco will rise at the rate of inflation plus an additional 2%. There will also be an extra 10% on rolling tobacco.
• There will be a new flat rate duty on all vaping liquid of £2.20 per 10ml from October 2026.
• VAT will be introduced on private school fees from January 2025 and schools’ business rates relief will be removed from April 2025.
• Some 500 old state schools that are not fit for purpose will be rebuilt at a total cost of £1.4bn. There will be an extra £300m for school maintenance each year, which will cover dealing with concerns about reinforced aerated autoclaved concrete (RAAC).
• The budget for free school breakfast clubs will be tripled to £30m in 2025 and 2026. The core budget for schools will also rise by £2.3bn.
• There will also be an investment of £300m for further education and £1bn for children with special educational needs (SEN).
• The HS2 rail link to Birmingham will end at London Euston, following speculation trains would terminate at Old Oak Common in west London.
• Air passenger duty on private jets will rise by 50%, which is the equivalent of £450 per passenger.
• The energy profits levy on oil and gas companies will increase to 38% until March 2030.
• The annual defence budget will fall below the pledged target of 2.5% of GDP next year – with an increase of £2.9bn.
• There will be a commitment of £3bn a year for Ukraine for “as long as it takes” to end the war there.
• Public finances will be in surplus, rather than in deficit, by the 2027-2028 financial year. The government claims this means reaching stability two years earlier than planned.
• The Office for Budget Responsibility (OBR) predicts UK GDP growth to be 1.1% in 2024, 2.0% in 2025, 1.85% in 2026, 1.5% in 2027, 1.5% in 2028, 1.6% in 2029.
• The OBR expects public sector net borrowing to be £105.6bn in 2025-26, £88.5bn in 2026-27, £72.2bn in 2027-28, £71.9bn in 2028-29 and £70.6bn in 2029-30.
• Consumer price index (CPI) inflation will hit 2.5% this year, according to OBR forecasts. Next year it will rise to 2.6% before falling to 2.3% in 2026, 2.1% in 2027, 2.1% in 2028 and 2% in 2029. It’s the goal of the Treasury to bring inflation down to 2%. The Bank of England has raised interest rates to bring the rate of price rises to 2%.
• The price of soft drinks will rise in line with inflation, with an increase in the drinks levy. Nearly £1bn a year will be raised thanks to the measure.
• All government departments will have to reduce their budgets by 2% next year. This will be achieved by “using technology more effectively and joining up services across government”.
• The budget for compensating victims of the infected blood scandal will be £11.8bn, with the Post Office Horizon scandal totalling £1.8bn.