Key Points You Need to Know as Rachel Reeves unveils £40 Billion Tax Rises in the Budget
Key Points You Need to Know as Rachel Reeves unveils £40 Billion Tax Rises in the Budget
Rachel Reeves delivered a historic budget - its Labour's first since 2010, and the first ever by a female chancellor as she unveiled £40 billion in tax rises. This is the biggest tax raising budget since 1993 - and a big raise in the NHS budget along?with an enormous borrowing spree. Businesses will see tax rises, higher rates, more regulation and increases in staff costs and wages. The below are the key highlights from the Budget - all without my usual hard hitting?personal?view, allowing you to come to your own conclusions on how this will affect you and your businesses.
Tax Changes and Business
- Employer's National Insurance Contributions (NIC) increases by 1.2% to 15% from April 2025 and threshold decreased at which NIC becomes payable from £9,100 to just £5,000
- Employment Allowance to increase from £5,000 to £10,000 benefitting smaller businesses.
- Capital Gains Tax - Lower Rate increases from 10% to 18% and Higher Rate from 20% to 24% bringing it inline with CGT on residential property which remains unchanged.
- The National Living Wage, for?employees aged 21 and over, will rise from £11.44 an hour to £12.21 an hour from Apr 2025.
- A freeze on the Income Tax thresholds will continue until 2028.?
- Corporation Tax main rate to remain at 25% for the duration of the Parliament.
- Business Rates Relief for Retail, Hospitality and Leise industry is announced at 40% (up to max of £110,000) for 2025/26. This was 75% however it was due to expire in 2025.
- £1m Business Asset Disposal Relief to be retained, but with an increasing rate from April 2025.
- Inheritance Tax - IHT (which is currently 40%) personal allowance threshold of £325,000 will be extended until 2030.
- Inherited Pensions which were previously excluded from your estate will now be subject to IHT from April 2027.
- The Stamp Duty (SDLT) surcharge for second homes will increase by 2% from 3% to 5% affecting the buy-to-let property market.
- The "non-dom" tax regime that applied to UK residents whose permanent home or domicile for tax purposes is outside the UK, will be abolished from April 2025?
- Private school fees will?rise - with VAT at the standard rate of 20% will be charged from 1st Jan 2025.
- Fuel Duty frozen for next year.
- Tax on non-draught alcoholic drinks and tobacco duty will increase by RPI inflation but tax on draught drinks will be cut by 1.7%
- Air Passenger duty will rise for flights adding £2 to the cost of an economy short-haul flight. Air Passenger duty on private jets will increase by a further 50%.
Major Spending Announcements
- £22.6bn increase in the day-to-day health budget and a £31bn increase in capital budget for our NHS.
- £70bn of investment through the newly created National Wealth Fund to spur investment and build new infrastructure.
- Funding for those affected by the infected blood scandal and Post office Horizon scandal.
- Modernise the HMRC with new technology and additional staffing.
- Crackdown on fraud in welfare claims, including direct access to bank accounts.
- Carers Allowance to increase by largest amount since inception
- State pension triple lock - 4.1% increase in 2025. Pension credit will also rise by 4.1%.
- 2.5% GDP spend on defence with the budget increasing by £2.9bn next year, and an additional £3bn a year to Ukraine "for as long as it takes"?
Amarjit Singh
Chairman - YABA
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The views expressed in this introduction are those of the Chairman of the Yorkshire Asian Business Association writing in his?individual capacity only and not those of the stakeholders of the organisation.
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