The Chancellor, Rachel Reeves MP, confirmed in Autumn Budget statement today that the State Pension rates will increase by 4.1% from next April, in line with the triple-lock commitment (to uprate by the higher of: inflation; earnings growth; or 2.5%). The Chancellor also confirmed that the freeze on tax thresholds will remain until April 2028 before they are increased, meaning more of pension increases year on year will be taxed. No mention was made of any new measures to mitigate the loss of Winter Fuel Payments (worth £200 – £300) to over 10 million pensioners.

This means that the basic rate of State Pension, payable to most pensioners (pre-2016) will rise by £6.94 per week from £169.50 pw to £176.44pw (£9,175 per year).  The new State Pension (from 2016) will increase from £221.20 per week to £230.27pw (£11,973 per year), an increase of £9.07per week.

The Chancellor also announced that the Carer`s Allowance earnings threshold, above which Carer`s Allowance of £81.92per week is stopped, will increase to £195.36 per week £10,158.72 annually, based on 16 hours work per week at the new increased National Minimum Wage of £12.21 an hour from next April.

The Chancellor announced a massive investment in NHS spending and productivity improvements to reduce waiting times and treatment outcomes, based on the three priorities identified in the recent report on the NHS to: move treatment closer to communities; move to digital services; and focus on prevention measures to improve public health and reduce growing demand for treatment.

The tax measures in the budget were as expected with increases in the Employer rates of National Insurance contributions; changes to Inheritance tax; and increases in Capital Gains Tax. Full details of the Budget can be found at this link: bbc.co.uk/budget

The main Tax changes announced in the Budget are summarised below:

Taxation

Total tax increases announced in the Budget total £40 billion.

Taxation (personal)

• Fuel duty frozen for another year, maintaining 5p cut. This is a tax cut worth £3bn and will save motorists almost £60 a year.
• National insurance, VAT and income tax will not rise for working people.
• Extending the inheritance tax threshold freeze for another two years (2028-2030). The first £300,000 can be inherited tax-free, rising to £50,000 if property, then £1 million for a living spouse or civil partner.
• 50% relief on inheritance tax on the alternative investment market. Tax set at 20%.
• Increasing the rate of air passenger duty by 50% for private jets, equivalent to £450 per passenger.
• Abolishing the non-dom tax regime and removing domicile status from the tax system from 6 April 2025. Introducing a new residence-based scheme while closing loopholes in the scheme and creating a simpler residence-based regime, designed to bring the best talent & investment to the UK.
• No extension in freeze to income tax and NI bands – uprated in line with inflation from April 2028
• Maintain incentive to purchase electric cars through Vehicle Excise, Duty First Year Rates and the Company Car Tax regimes, as well as by extending 100% First Year Allowances.
• Abolish non-dom tax regime and removing domicile status from the tax system from 6 April 2025. Introduce new residence-based scheme while closing loopholes in scheme & creating a simpler residence-based regime, designed to bring the best talent & investment to the UK.

Taxation (business)

• Increase in employers’ national insurance contributions by 1.2% to 15% in 2025 and increase in secondary threshold from £91,000 to £5,000 to raise £25 billion a year.
• Increase employment allowance from £5,000 to £10,500. 865,000 employers won’t pay any national insurance contributions.
• Increasing lower rate for capital gains tax from 10-18% and a higher rate from 20-24%
• Maintaining lifetime limit for asset disposal relief at £1 million:
  • 10% this year
  • 14% from April 2025
  • 18% from 2026-27
• 40% relief of business rates for retail and hospitality, up to a cap of 110,000.
  • From 2026-27 permanently lower tax rates will be introduced for retail, hospitality & leisure properties.
  • Plus, for 2025-26, 250,000 retail, hospitality & leisure properties will receive 40% relief on their bills, up to a cash cap of £110,000 per business.
• Renewal of tobacco duty escalator: one-off increase on tobacco duty by RPI+2%; increase on hand-rolled tobacco duty by 10% this year.
• Flat rate duty on all vaping liquid from 2026.
• Sugary drinks tax to be increased to rise with CPI.
• Alcohol Duty on non-draught products to increase by 1.7%; a cut of 1p for draught products.
• Corporation tax: frozen at 25%.
• Changes to the Energy Profits Levy (EPL) including increasing its rate by three percentage points to 38%, removing the 29% investment allowance, and extending the time the levy applies until 31 March 2030.
• From 1 Jan 2025, VAT will apply to all education, training and boarding services provided by private schools. Removing business rate relief

Property tax

• Increase the Higher Rates for Additional Dwellings of Stamp Duty Land Tax from 3% to 5% from 31 October 2024

Tax avoidance

• Tax avoidance clampdown – £6.5 billion by end of forecast.