UK Budget 2024

Chancellor Rachel Reeves has today (30 October 2024) unveiled the contents of her Budget in the House of Commons.

The Rt. Hon. Rachel Reeves MP said her first budget will raise taxes by £40 billion and key tax rises look set to include an increase to employers’ national insurance contributions and the inclusion of inherited pensions in inheritance tax.

The Chancellor noted that the Autumn Budget 2024 was:

• putting the public finances on a sustainable path by strengthening the fiscal framework, including announcing new fiscal rules, and taking difficult decisions on tax, welfare and spending.
• growing day-to-day departmental spending at an average of 2.0% per year in real terms between 2023-24 and 2029-30 to support public services, including to deliver 40,000 extra elective appointments a week and reduce NHS waiting lists.
• boosting capital investment by over £100 billion over the next five years, including in transport, housing and research and development (R&D), with a greater focus on value for money and delivery to help unlock long-term growth.

The Office for Budget Responsibility (OBR) has assessed the impact of the government’s decisions and in the OBR’s Economic and Fiscal Outlook growth is forecast to increase to 2.0% in 2025 before moderating to 1.6% by 2029.

The main headline tax increase unveiled was a larger increase on employers’ national insurance contributions than expected, a measure that is expected to raise more than half of the £40 billion in tax rises outlined within the budget. The rate of NI paid by employers will rise to 15 per cent, up by 1.25 percentage points from April 2025.

This increase was introduced alongside a lowering of the threshold for employer’s national insurance from £9,100 to £5,000 and increase in the employment allowance from £5,000 to £10,500.

The higher rate of Capital Gains Tax was also increased from 20% to 24% and the lower rate from 10% to 18%. Inheritance Tax loophole closures were announced, bringing inherited pensions into IHT from April 2027 alongside a commitment to reform agricultural property relief.

The Chancellor also announced plans to scrap the current non-dom regime from 2025, to be replaced by a new residence-based scheme.

For more information on announcements made in the Budget see AIA's insights page. 

Among the range of announcements made within Budget 2024 the Chancellor also announced updates to Making Tax Digital for Income Tax Self Assessment and referenced HMRC's focus on improving the regulation of the tax advice market.

The Government stated its commitment to delivering Making Tax Digital (MTD) for Income Tax confirming that self-employed individuals and landlords with qualifying income over £50,000 will have to use MTD for Income Tax from April 2026, and those with qualifying income over £30,000 from April 2027.

In addition, it was announced that, by the end of this Parliament, the government will expand the rollout of MTD for Income Tax to self-employed individuals and landlords with qualifying income over £20,000. The timing for this will be confirmed at a future fiscal event.

David Potts, AIA Director of Policy & Regulation said, "Today's Budget announcements have ended a period of speculation regarding potential tax rises, providing much-needed certainty to AIA members as they advise their clients." He continued, saying, "The Government's announcements relating to MTD and strengthening the regulatory framework in the tax advice market are key issues for AIA and its members, and it is encouraging that the Government has committed to delivering MTD for income tax Self Assessment and in addition has announced options to strengthen the regulatory framework of the tax advice market following AIA's involvement in the consultation process."

 

Webinar: UK Budget 2024

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