Budgets are like buses apparently, you wait for ages and then two come along close together. In March 2024 we had the Blue Bus park up driven by the Conservatives Jeremy Hunt to deliver a Spring Budget 2024. Now we’ve had the Red Bus pull up driven by Labour’s Rachel Reeves to deliver an Autumn Budget 2024.
The Significance of Autumn Budget 2024
The Autumn Budget 2024 is significant for a few reasons, so before we cover the key contents of the Labour Budget 2024 we’ll cover why it’s significant.
The 30 October 2024 Budget was the first Budget delivered by a Labour Chancellor since 2010, when Alistair Darling walked into Parliament with the famous red briefcase… just 13 days before Prime Minister Gordon Brown stepped out of No.10 to call for the General Election 2010 – which Labour would lose and cede power to the Conservative and Liberal Democrat coalition Government. The Conservative Chancellor, George Osborne, clutched the red briefcase and delivered an Emergency Budget in June 2010.
in the year 2024, Rachel Reeves walked into the House of Commons to deliver the Autumn Budget… As the first ever female Chancellor. Yes, we may have had 3 female Prime Ministers but never a Chancellor.
A final significant detail about the Labour Autumn 2024 Budget is the political choices made. The Conservative Budgets had been about lowering taxation and wealth creation. The Labour Budget 2024 was clear, both Keir Starmer and Rachel Reeves had been sowing seeds for weeks, this would be a budget of pain, it would be a budget for the “Working Person”, it would be a budget of tax increases to fund public services. A very significant shift from the past 14 years.
The Budget 2024 Overview
- Minimum Wage Increase: The national minimum wage will rise to £12.21 per hour for adults, a 6.7% increase set to start in April 2025. This is accompanied by an 18% increase for younger workers, aiming to help with the high cost of living.
- Tax and Business Initiatives: While major income, VAT, and National Insurance rates remain unchanged, the Chancellor focused on adjusting tax reliefs and closing loopholes. Key changes include tightening inheritance and capital gains tax thresholds, which are intended to help close the fiscal gap without impacting the base rates. Businesses can expect a new tax roadmap designed to offer stability and encourage investment, with continued corporate tax relief on targeted growth areas.
- NHS and Public Services Funding: The budget includes a £1.5 billion investment for the NHS to reduce waiting times, targeting the creation of two million extra appointments annually by 2025. Public service support is prioritised to reinforce healthcare access and improve social services.
- Workplace Reforms: New measures for worker protection are introduced, aiming to address ‘bogus self-employment’ and reinforce employment rights. This includes exploring a new ‘Single Worker Status’ that could redefine employment classifications, though details are pending further consultation.
- Climate and Infrastructure Investments: Reeves outlined increased funding for sustainable infrastructure projects and green initiatives, aiming to create new jobs and support environmental targets.
The Chancellor’s budget reflects Labour’s intent to stabilise the economy, addressing public spending needs while focusing on sustainable growth and targeted investments. This blend of measures is intended to provide economic security and lay a foundation for future reforms.
The Details of the Autumn Budget 2024
No Changes to Personal Tax and National Insurance
No real surprises here, for weeks and months we’d been told by Keir Starmer, Rachael Reeves, Angela Rayner and Co that “Working People” would be protected from tax increases.
- Personal Tax Rates: No change! Personal tax rates stay fixed at previous levels so:
- Basic Rate 20%
- Higher Rate: 40%
- Additional Rate: 45%
- Personal Tax Bands: No change! Personal tax bands stay fixed… for now! They are:
- Basic Rate £12,571 to £50,270
- Higher Rate: £50,271 to £125,140
- Additional Rate: over £125,140
- National Insurance: There are no changes to the rates or threshold for National Insurance for employees.
Changes to Employer National Insurance
In the Autumn Budget 2024, Chancellor Rachel Reeves announced significant changes to employer National Insurance contributions (NICs), effective from 6 April 2025:
- Rate Increase: The employer NIC rate will rise by 1.2 percentage points, from 13.8% to 15%. (GOV.UK)
- Threshold Reduction: The annual earnings threshold at which employers begin paying NICs per employee will decrease from £9,100 to £5,000. (GOV.UK)
- Employment Allowance: To mitigate the changes to the rate and Employer National Insurance (eNI) threshold, the Employment Allowance will increase from £5,000 to £10,500, allowing eligible employers to offset their NIC liabilities. (GOV.UK)
VAT Unchanged
There are no changes to VAT, so the Standard Rate (20%), Reduced Rate (5%) and Zero/Exempt (0%) stay the same and there was no hint of a change in the short term future.
No Change to Corporation Tax
It will have come as a huge relief to business owners to hear that there were no increases announced to Corporation Tax, so they remain fixed at the previous levels:
- Small Profit Rate (Upto £50,000): 19%
- Main Rate (Over £250,000): 25%
- Margin Relief:
- Lower Limit: £50,000
- Upper Limit: £250,000
Increases to Wages, Pensions and Benefits
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Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
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Rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a “single adult rate”
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Basic and new state pension payments to go up by 4.1% next year due to the “triple lock”, more than working age benefits
Other Points of Interest
Draft Beer Duty
The hospitality industry was given something to CHEERS about! Whilst the tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation, the duty on draught drinks cut by 1.7% or 1p a pint.
Fuel Duty
There was good news for motorists, the 5p cut in fuel duty on petrol and diesel brought in by the Conservatives, due to end in April 2025, kept for another year.
Smoking and Vaping
As expected, there have been increases to duty around smoking and vaping.
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New flat-rate tax of £2.20 per 10ml of vaping liquid introduced from October 2026, as ministers shelve Tory plans to link the levy to nicotine content.
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Tax on tobacco to increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco
Summarising the Budget 2024
There was a lot of fear, panic and uncertainty about the contents of the Labour Autumn 2024 Budget. There had been months of talk of “tough decisions” and “Short term pain for long term gain”, we’ve heard the consistent message from Sir Keir Starmer as the Labour Prime Minister, Rachel Reeves the Deputy Prime Minister and Rachel Reeves the Chancellor that “working people” would not face tax rises (FYI they will see tax rises) so it was logical to assume businesses would pick up the tab… again! Just as businesses have had to pick up the tab for the 2020-21 Covid support issued by the Government through an increase to Corporation Tax.
When asked about thoughts on the Labour Budget 2024 Carl Ford (Founder of Carl Ford & Associates) his comment was “Well, it could’ve been worse”. That’s hardly a great endorsement, but sums up the thoughts of many in business.
If you need help understanding the effects of the Labour Autumn 2024 Budget, then please do contact us for support – especially with understanding the impact of the changes to Employer National Insurance.
