The UK Autumn Budget 2024 brings a range of fiscal changes, impacting personal and business taxes, public services, and housing initiatives. Here’s a closer look at what’s new and how these updates may affect individuals and businesses across the UK.

Personal Taxes

Starting April 6, 2025, late payment interest rates on personal tax liabilities will rise by 1.5%, from 7.5% to 9%. This increase affects unpaid income tax, capital gains tax, and national insurance contributions (NIC). However, thresholds for income tax and NIC will remain frozen until April 2028, and annual subscription limits for ISAs, Lifetime ISAs, and Junior ISAs will stay unchanged until April 2030.

In air travel, the Air Passenger Duty (APD) rate for private jets will increase by 50% from April 2026, marking a push for higher contributions from luxury travel sectors.

Duty Changes

Fuel Duty

Fuel duty rates will stay frozen for an additional year, with the temporary 5p cut extended until March 22, 2026. The previously planned inflation adjustment for 2025-26 has also been scrapped, providing continued relief to motorists amidst broader cost-of-living pressures.

Air Passenger Duty

Starting in 2026-27, short-haul economy flight APD will increase by £2, and rates on private jets will rise by 50%. The government is considering extending this higher rate to a wider range of private jets, reflecting a shift towards reducing the environmental footprint of air travel.

National Insurance Changes

From April 2025, employer NIC rates will increase by 1.2%, bringing rates for Classes 1, 1A, and 1B to 15%. The threshold for secondary Class 1 NIC will be lowered from £9,100 to £5,000, increasing costs for employers of full-time workers. Additionally, the Employment Allowance will rise from £5,000 to £10,500, with eligibility requirements eased to help larger businesses absorb rising employment costs.

For employers, this NIC increase makes salary sacrifice arrangements more appealing, especially since NIC on pension contributions remains exempt, and the lower benefit-in-kind charge for electric vehicles is extended until 2030.

National Minimum Wage (NMW)

The Chancellor has also announced notable increases to the National Living Wage (NLW) and NMW rates:

For over-21s, the NLW will rise by 6.7%, reaching £12.21 per hour, equating to a full-time annual wage of £23,873.
For 18-20-year-olds, the rate will see a historic 16.3% jump from £8.60 to £10 per hour, representing a meaningful boost for younger workers.

This rise brings added costs for employers with large lower wage workforces. Employers are encouraged to carefully review pay policies to ensure compliance with NMW regulations, as underpayment penalties can add up if detected after rates rise.

Stamp Duty Rate Changes

Starting October 31, 2024, the additional residential property stamp duty rate will increase from 3% to 5%. This change applies to both individuals purchasing additional properties and companies buying residential properties without qualifying for certain exemptions. Purchases of homes exceeding £500,000 by companies will also see a rate increase, moving from 15% to 17%.

These adjustments are aimed at curbing the purchase of second homes and buy-to-let properties while encouraging family home ownership.

Public Sector Funding and Social Programs

Healthcare Funding

A significant £22.6 billion boost is allocated to the NHS, with an additional £3.1 billion dedicated to capital expenditures. These funds aim to reduce waiting times by facilitating around 40,000 extra weekly appointments and are part of a forthcoming 10-year NHS strategic plan set for release in spring 2025.

Housing Initiatives

In line with the government’s commitment to address housing shortages, the budget includes plans for 1.5 million new homes by 2025, supported by a £5 billion fund. These housing initiatives align with efforts to improve affordability and expand access to quality housing across the UK.

Education and Child Support

The budget prioritizes early education funding, increasing resources for school breakfast programs and special needs education. Carer’s Allowance will also see a significant increase, allowing carers to earn over £10,000 annually.

Tax Reforms

A series of tax reforms will take effect, with changes impacting both employers and individual taxpayers:

Employer NIC: A two-point increase, bringing the rate to 15%, while the threshold for employer NIC contributions will lower to £5,000 annually.
Capital Gains Tax (CGT): Rates are set to rise from 10% to 18% at the basic level and from 20% to 24% at the higher rate, increasing tax liabilities on non-residential gains.
Stamp Duty: The surcharge on second homes will increase from 3% to 5%.
Inheritance Tax: Nil-rate bands for inheritance tax will remain frozen until 2030. From April 2027, pensions will also come under inheritance tax, with exemptions on private pensions reduced.
VAT on Private Schools: Effective January 2025, private school fees will be subject to VAT, with business rates relief ending by April 2025.

Pensions and Retiree Support

To uphold the triple-lock guarantee, the government will increase the basic and new state pensions by 4.1% for 2025-26. This change aims to support around 12 million pensioners, ensuring their pensions keep pace with inflation and cost-of-living increases.

This budget reflects the government’s strategic focus on supporting essential public services, addressing housing issues, and tightening tax policies. The reforms aim to strike a balance between funding for critical sectors, such as healthcare and housing, while adjusting tax and wage policies to bolster employment and social support.

As these changes roll out, individuals and businesses alike will need to adapt to new tax rates, wage structures, and compliance requirements to navigate the evolving fiscal landscape.

UK Autumn Budget 2024: Key Changes in Tax