Autumn Budget 2024: The First Labour Budget in 14 Years
The UK’s Autumn Budget 2024, delivered by Chancellor Rachel Reeves, marked a historic moment as the first budget by a female Chancellor and the first Labour budget in over a decade. Here’s a comprehensive breakdown of the key announcements.
Economic Stability and Public Finances
Labour’s fiscal agenda begins with transparency. The government revealed a ￡22 billion deficit due to undisclosed costs, with Reeves committing to full financial accountability. The Office for Budget Responsibility (OBR) confirmed that if it had been informed, forecasts would have been adjusted. In line with OBR recommendations, the government will provide detailed breakdowns in future to prevent financial discrepancies
Taxation and Revenue Measures
Capital Gains Tax (CGT)
CGT rates for basic-rate taxpayers will increase from 10% to 18%, and for higher-rate taxpayers from 20% to 24% by 2025, with residential property gains remaining the same. The government also adjusted?Employer NICs, raising them by 1.2% and lowering the threshold to ￡5,000 to help cover public sector demands
Inheritance Tax (IHT)
Starting 2026, the new IHT model includes a 50% relief on assets over ￡1 million, amounting to an effective 20% tax rate. This move is designed to simplify estate taxes while capturing more revenue from high-value estates
Public Spending and Welfare Commitments
NHS and Social Welfare
An additional ￡1.5 billion will be directed toward the NHS, prioritizing mental health services and backlog reduction. The?National Minimum Wage (NMW)?is set to rise to ￡12.21 per hour, with Carer’s Allowance increased to ￡10,000 annually. Meanwhile, state pensions are expected to rise by 4.1% in 2025, aiming to support those on fixed incomes
Education and Housing
Private school fees will be subject to VAT from 2025, with reinvested funds boosting public education. The government pledged to build 1.5 million new homes and implement public transport projects, particularly in the north, with increased funding for Transpennine Rail and green energy
Business and Corporate Policy
Business Rates and Corporate Tax
Corporation tax will remain capped at 25%, and businesses will benefit from extended full expensing and R&D reliefs. A new business rates relief will apply to retail, hospitality, and leisure sectors, providing a 40% discount from 2025, replacing the current 75% relief
Anti-Fraud and Transparency Initiatives
Labour introduced a?Value-for-Money Office?to ensure taxpayer funds are used effectively. The DWP will intensify efforts to detect welfare fraud, including direct bank account checks, while HMRC will undergo modernization with new systems and additional staff to support tax collection and enforcement
Long-Term Growth and Economic Forecasts
The government expects gradual GDP growth, forecasting 1.1% growth in 2025 and reaching 2% by 2026. Labour plans to reduce borrowing from ￡127 billion to ￡70.6 billion by 2029, aiming for a budget surplus by 2027. A 2% savings target has been set across departments to support these goals
This historic budget reflects Labour’s commitment to economic stability, strengthened public services, and forward-thinking fiscal policies. For a complete breakdown, please contact us.
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