Autumn Budget 2024: The First Labour Budget in 14 Years

Nov 5, 2024 | Financial Planning, Pensions, Regulations, SJB US, UK

Autumn Budget 2024: The First Labour Budget in 14 Years

Nov 5, 2024 | Financial Planning, Pensions, Regulations, SJB US, UK

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​

Financial Times
Grant Thornton UK LLP

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​

Small Business UK
Grant Thornton UK LLP

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​

CRS

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​

PwC
GOV.UK

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​

Institute for Fiscal Studies
KPMG

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​

Grant Thornton UK LLP

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​

CRS

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​

Financial Times
Institute for Fiscal Studies

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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Investment advice and investment advisory services offered and provided through Blacktower Financial Management US, LLC. This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, tax advice, tax recommendations, investment recommendations or investment research. You should seek advice from a professional before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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