Raising taxes by around £40 billion, Chancellor Rachel Reeves has delivered Labour’s first Budget in 14 years. Here’s a summary of the main announcements that may be of interest to you:
Business & Employment Taxes
- National Insurance – from April 2025 Employers’ National Insurance contribution increases by 1.2% to 15%
- NIC Threshold – from April 2025 this decreases significantly to £5,000 (from £9,100)
- Employment Allowance – to increase to £10,100 (from £5,000)
- £1m Business Asset Disposal Relief – to be retained but with an increasing rate
- Enterprise Investment Scheme – kept until 2035
- Business Rates – existing 40% on business rates for the retail, hospitality and leisure industries will continue in 2025/26, up to a cap of £110,000 per business
- Corporation Tax – to be kept at 25%
- Carried Interest Rate – from April 2025 this will increase to 32%
- Energy Profits Levy – set to increase to 38% and expire in March 2030, with the 29% investment allowance being removed
- R&D Tax Relief – no changes to the current R&D tax reliefs. An R&D disclosure facility will be launched by the end of 2024, to enable voluntary disclosures of any previously overclaimed relief
Personal Taxes
- Capital Gains Tax – the lower rate will rise from 10% to 18% and the higher rate from 20% to 24%. CGT on residential property remains unchanged
- Inheritance Tax – threshold frozen until 2030. From April 2027 inherited pensions to be included in IHT
- Income Tax – thresholds to rise from 2028/29 tax year onwards, in line with inflation
- Non-Domicile Regime – to be abolished from April 2025, with a new residence based scheme implemented
- Stamp Duty Land Tax – from 31 October, the surcharge on second homes will increase to 5%
- Right to Buy Discounts – to be reduced, meaning a council house will cost more
Other Announcements
- National Minimum Wage – from April 2025 this will rise to £12.21 per hour, moving towards a single national rate
- VAT on Private Education – to be introduced from January 2025, with business rates relief removed from April 2025
- Draught Duty – to reduce by 1.7%, meaning a penny off a pint in the pub
- Alcohol Duty – non-draught products will increase in line with RPI from February next year
- Tobacco Duty – to increase with RPI, with a flat rate duty on all vaping liquid to come into force from October 2026
- Fuel Duty – frozen for next year
- Air Passenger Duty – set to rise on private jets
- Infected Blood Scandal – £11.8bn funding for those affected
- Post Office Horizon scandal – £1.8bn funding for those affected
- National Wealth Fund – £70bn investment
- Fraud – crackdown in welfare claims, including direct access to bank accounts
- New Get Britain Working White Paper – to tackle those who are economically inactive
- HMRC – to be modernised, with new technology and extra staff
- Carers’ Allowance – the weekly earnings limit will rise to the equivalent of 16 hours a week at the National Living Wage
- Household Support Scheme – to be enhanced
- State Pension Triple Lock – 4.1% increase in 2025
- Pension Credit – to rise by 4.1%
- Defence – to rise next year by £2.9bn, with an additional £3bn a year to support Ukraine
- HS2 – to be extended to London Euston Station
- NHS Budget – £22.6bn increase
- Core Schools Budget – to rise by £2.3bn next year, with an extra £1bn funding increase for special educational needs provision
- Housebuilding – £5bn investment and £1bn of funding to remove dangerous cladding next year.
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