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Budget 2024 Summary


Britain’s first female Chancellor of the Exchequer, Rachel Reeves, delivered her first budget statement today, announcing a series of measures to raise £40 billion of taxes on a mission to "rebuild Britain", “drive economic growth” and “invest, invest, invest”, with large spending increases for the NHS, the Ministry of Defence, and Education.

On Business Rates, Reeves said, "From 2026-27, we intend to introduce two permanently lower tax rates for retail, hospitality and leisure properties, which make up the backbone of high streets across the country, and it is our intention that is paid for by a higher multiplier for the most valuable properties.”

The temporary retail, hospitality and leisure relief scheduled to end in April 2025, will be replaced by 40% relief for 2025-26, up to a cap of £110,000 per business.

There will be no increase to Income Tax, VAT, or employee National Insurance contributions, but the increase to employers’ NI will raise £25billion.

On retail crime the chancellor said, “We will scrap the effective immunity for low value shop lifting.... providing additional funding to crack down on the organised gangs that target retailers.”

In other measures, a covid corruption commissioner will be appointed and DWP counter fraud teams expanded, £11.8bn has been allocated to compensate victims of the infected blood scandal, with £1.8bn set aside for wrongly prosecuted Post Office sub-postmasters. The non-dom tax regime will be abolished from April 2025 and replaced with a residence-based regime.

The budget also included £5bn to deliver the government’s housing plans, and £1bn to remove dangerous cladding.

Office for Budget Responsibility 

  • Office for Budget Responsibility (OBR) predicts inflation to average 2.5% this year, 2.6% in 2025, falling to 2.3% in 2026
  • Official definition of UK government debt loosened by including a wider range of financial assets, such as future student loan repayments
  • OBR forecast real GDP growth will be 1.1% this year, rising to 2% next year, and 1.8% 2026.
Spending headlines
  • For education there is £6.7 billion allocated for capital investment - 19% real terms increase on this year – with £1.4 bn to rebuild over 500 schools in the greatest need
  • A £22.6 billion boost in day-to-day spending for the NHS - the largest increase since 2010 (excl. covid), and a £3.1bn increase to the budget for investment
  • Defence spending to increase by £2.9bn, exceeding UK’s NATO commitment

Personal Tax

  • Rates of income tax and National Insurance (NI) paid by employees, and of VAT to remain the same
  • Income tax band thresholds to be unfrozen in 2028, preventing more people being dragged into higher bands as wages rise over time
  • Freeze on inheritance tax thresholds extended beyond 2028 to 2030
  • Capital gains tax paid on profits from selling shares to increase from up to 20% to up to 24% - rates on additional property sales to stay same

Business Tax

  • Main rate of corporation tax, paid by businesses on taxable profits over £250,000, to stay at 25% until next election
  • Firms to pay National Insurance on workers’ earnings above £5,000 from April, down from £9,100 currently, with the rate increasing from 13.8% to 15%
  • Employment allowance - which allows companies to reduce their NI liability - to increase from £5,000 to £10,500
  • Tax paid by private equity managers on share of profits from successful deals to rise from up to 28% to up to 32% from April

Wages and benefits

  • Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
  • Rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a "single adult rate"
  • Eligibility widened for the allowance paid to full-time carers, by increasing the maximum earnings threshold from £151 to £195 a week
  • Basic and new state pension payments to go up by 4.1% next year due to the "triple lock", more than working age benefits

Housing

  • Current affordable homes budget, which runs until 2026, boosted by £500m
  • Social housing providers to be allowed to increase rents above inflation under multi-year settlement, external
  • Stamp duty surcharge, paid on second homes and buy to let properties in England and Northern Ireland, to go up from 3% to 5%

Transport

  • 5p cut to fuel duty on petrol and diesel, due to end in April 2025, kept for another year
  • Commitment to fund tunnelling work to take HS2 high-speed rail line to Euston station in central London
  • Commitment to deliver upgrade to trans-Pennine rail line between York and Manchester, running via Leeds and Huddersfield
  • £500m increase in road maintenance budgets
  • £2 cap on single bus fares in England to rise to £3 from January
  • Air Passenger Duty on flights by private jet to go up by 50%

Housing

  • Current affordable homes budget, which runs until 2026, boosted by £500m
  • Social housing providers to be allowed to increase rents above inflation under multi-year settlement, external
  • Stamp duty surcharge, paid on second homes and buy to let properties in England and Northern Ireland, to go up from 3% to 5%

Smoking and alcohol

  • New tax of £2.20 per 10ml of vaping liquid introduced from October 2026
  • Tax on tobacco to increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco
  • Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation
  • tax on draught drinks cut by 1.7%

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