Budget 2024: Employers’ national insurance will raise more than predicted as chancellor seeks to increase taxes by £40bn
The budget will increase taxes by £40bn, with the lion’s share coming from a £25bn rise in employers’ national insurance contributions, the chancellor announced at the budget.
Rachel Reeves said the amount businesses will pay on their employees’ national insurance contributions will increase from 13.8% to 15% from April 2025, with the current £9,100 annual threshold lowered to £5,000, in what she called a “difficult choice” to make.
The Office for Budget Responsibility (OBR), which monitors the government’s spending plans and performance, said most of the burden from the increase will be passed on to workers through lower wages, and consumers through higher prices.
It estimated the national insurance hike would reduce the average hours worked by the equivalent of 50,000 hours.
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The £40bn rise in taxes is thought to be the largest increase at a budget since John Major’s government in 1993 and is set to more than fill the £22bn “black hole” Labour said the Conservative government left them with.
Ms Reeves also announced the current freeze on income tax thresholds will end in 2028/29 and will be uprated in line with inflation after that.
The previous Conservative government froze the thresholds which meant more people paying higher rates of tax as their salary increases and they move into higher tax bands.
The OBR said the tax burden will reach “a historic high of 38% of GDP by 2029/30” and predicted inflation and interest rates will both be higher as a result of the budget.
Ms Reeves said a “line-by-line breakdown” of the black hole will be published, which she said shows there were “hundreds of unfunded pressures on the public finances” under the Conservatives.
The chancellor, who said she was “deeply proud” to be the country’s first female chancellor, insisted the Labour government would “invest, invest, invest” and put “more pounds in people’s pockets”.
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‘This budget raises taxes by £40bn’
Some of the other major changes the chancellor also announced include:
• Fuel duty will stay frozen next year and 5p cut to remain
• Capital gains tax lower rate will increase from 10% to 18%, higher rate from 20% to 24%
• Residential property capital gains tax will remain at 18% and 24%
• Two “permanently lower” business tax rates for retail, hospitality and leisure properties
• 40% relief on business rates in 2025-26 up to a £110,000 cap
• Inheritance tax thresholds frozen until 2030
• Higher rate stamp duty for second homes increased to 5% from Thursday
• Alcohol duty rates on non-draught drinks to increase in line with RPI from February
• Draught alcohol duty cut by 1.7% – 1p off a pint
• HS2 will go to Euston in central London
• Every government department must make 2% cuts by next year
• £22.6bn extra for the NHS’ day-to-day health budget, £3.1bn more for the capital budget
• £2.3bn for schools to hire teachers next year, £6.7bn for the schools capital budget
• £2.9bn for Armed Forces next year
• £500m increase in road budgets next year.
Rachel Reeves and her Treasury team before the budget. Pic: Reuters
The chancellor started her budget speech by saying the country “voted for change” and “responsible leadership” on 4 July at the general election – and went on to attack the “irresponsibility” of the previous Conservative government.
“We must restore economic stability and turn the page on the last 14 years,” she said.
Ms Reeves added: “The party opposite failed our country. Their austerity broke our National Health Service. The British people have inherited their failure.”
“They called an election to avoid making difficult choices,” she continued.
The chancellor outlined her priorities as economic growth and the NHS, and pledged an end to “short-termism”.
Labour promised to keep the triple lock on pensions, where the state pension goes up each year by whichever is higher of 2%, inflation or earnings growth.
She said that means it will be uprated by 4.1% next year so more than 12m pensioners will be up to £470 better off.
She also set aside £11.8bn for compensation for victims of the infected blood scandal, and £1.8bn for victims of the Post Office IT scandal.
Ahead of the first Labour budget since Alistair Darling’s in 2010, Labour committed in its election manifesto to not increase income tax, national insurance or VAT on “working people”, which Ms Reeves said she had kept to.
Various ministers got into a tangle over who exactly qualified as a working person in the weeks before the budget.
Pic: Reuters
A few plans were leaked or announced ahead of the budget, including:
• All private school fees will include VAT from January, business tax relief to be removed from private schools in April
• An increase on employers’ national insurance – but they did not say by how much
• A change to the fiscal rules – the way in which the government borrows and pays back money – in order to allow for greater investment spending
• An increase to the bus fare cap by 50% to £3
• A boost to the national living wage, with the minimum someone aged 21 and over can be paid increasing by 6.7% to £12.21 an hour
• The national minimum wage, for 16 to 20-year-olds, will also increase – by 16.3% to £10 an hour.
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UK
UK sanctions Russian military officer accused of Salisbury novichok poisoning in crackdown on Kremlin
The UK has sanctioned a Russian military officer accused of helping poison former double agent Sergei Skripal with novichok in Salisbury.
The Foreign Office has imposed 56 new sanctions on people and entities linked to Russia, including those in the Wagner mercenary group that operates unofficially on Vladimir Putin’s behalf, and companies based in China, Turkey and central Asia supplying parts to Russia.
Denis Sergeev, who the Met Police charged over the attempted murder of double agent Mr Skripal, has been sanctioned under the chemical weapons sanctions regime.
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“Sergeev provided support in the preparation and use of the chemical weapon novichok in Salisbury…and provided a coordinating role in London on the weekend of the attack,” the Foreign Office said.
Sergei Skripal and Yulia Skripal were poisoned with novichok. Pic: Shutterstock
Mr Skripal and his daughter Yulia were found unconscious on a bench in Salisbury, Wiltshire, in March 2018.
Police said nerve agent novichok was applied to the front door of his home.
Three Russians, who police said are GRU military intelligence officers, have been charged in absentia over the incident.
Sergeev was the last to be charged after police said he was acting under the alias Sergey Fedotov.
Dawn Sturgess died after picking up a sample perfume bottle with novichok in
A public inquiry into the death of Dawn Sturgess, a woman unwittingly killed after coming across a sample perfume bottle containing novichok, heard Mr Skripal believed Mr Putin had ordered the attack on him.
Moscow has repeatedly rejected British accusations the Kremlin was involved.
The inquiry heard the amount of novichok in the perfume bottle was enough to kill thousands of people.
Also included in the latest sanctions round are companies supplying Russia with military equipment being used in its war against Ukraine.
Ten companies based in China, and a handful from Turkey, Estonia, Kazakhstan and Uzbekistan, are on the list for supplying and producing machine tools, microelectronics and components for drones used by Russia in Ukraine.
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North Korean troops near Ukrainian border
Russian-based mercenary groups operating in sub-Saharan Africa with links to the Kremlin are also on the list.
The Foreign Office said they have threatened peace and security in Libya, Mali and the Central African Republic, and have committed widespread human rights abuses across Africa.
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Foreign Secretary David Lammy said: “Today’s measures will continue to push back on the Kremlin’s corrosive foreign policy, undermining Russia’s attempts to foster instability across Africa and disrupting the supply of vital equipment for Putin’s war machine.
“And smashing the illicit international networks that Russia has worked so hard to forge.
“Putin is nearly 1,000 days into a war he thought would only take a few. He will fail and I will continue to bear down on the Kremlin and support the Ukrainian people in their fight for freedom.”
Police have made a direct appeal to those involved in the murder of a teenager to finally bring her family closure, exactly 30 years after she disappeared.
Lindsay Rimer, 13, went out to buy a box of Corn Flakes late in the evening on 7 November 1994 and never returned home. Her body was found in a canal close to her home six months later.
Lindsay’s family have also marked this year’s anniversary with a renewed appeal for information from the public, particularly in the town of Hebden Bridge in West Yorkshire where Lindsay lived and died.
“This person should be in prison, not us because that’s where we feel we’ve been for the last 30 years,” her sister Kate Rimer told Sky News.
Juliet Rimer was just one when her sister was killed but has recently been reading letters and diaries to gain a better understanding of a life cut short.
“It’s just, it’s a bit of a horror film that we have to do this,” she said. “The fact that I had a sister that I never knew who was murdered, I just can’t wrap my head around that. It’s had a massive impact on me.”
Lindsay months before her death
Kate, who played the part of her sister in a police reconstruction a year after her disappearance, says the family believes someone has information that could lead to her killer’s arrest.
“It’s usually been my mum who does this but the emotional toll it’s taken on my parents means that they just can’t do this anymore.
“It’s incredibly emotional, it opens everything up, and it reflects back over 30 years ago and everything that we lived through then. And just the horror of a loved family member, a child being murdered, is a really bizarre situation. You live your normal life around that and then we’re opening up again to bring murder and death back into our family.”
In the years since Lindsay’s disappearance, police have spoken to more than 5,000 people and examined 1,200 vehicles. Two men were arrested and later released.
A new sighting of Lindsay after she left the convenience shop on the night she disappeared has been confirmed and police believe those in the community have vital information.
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Juliet, left, and Kate Rimer speak to Sky News this month
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Detective Chief Inspector James Entwistle of West Yorkshire Police made a direct appeal to those who were involved in killing and disposing of her body.
“Has this been on your conscience for thirty years?” he said.
“It’s perfectly possible there’s more than one person involved, its perfectly possible there’s a vehicle involved. Maybe you didn’t murder Lindsay but you know exactly who did because you were there and that’s sat on your conscience for 30 years.
“Now is the time to come and talk to us, now is the time to draw a line under this and bring that closure for Lindsay’s family.”
New posters featuring Lindsay’s picture have gone up around Hebden Bridge as part of the appeal for information and an increased police presence will be in the town.
Juliet said: “It has been 30 years but Lindsey didn’t deserve this and we owe it to her as her family to keep doing this.”
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