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UK Autumn Budget 2024: How It Affects Ordinary Working People

The UK Autumn Budget 2024, delivered by Chancellor Rachel Reeves, introduced several key tax changes that will impact working people. While the Government claims these measures are designed to stabilise the economy and promote long-term growth, many will find themselves paying more tax over the coming years. Here’s what you need to know.

1. National Insurance Contributions (NICs)

🔺 Changes:

  • Employer NICs will rise from 13.8% to 15.0% from April 2025.
  • The secondary threshold (the point where employers start paying NICs) will be reduced to £5,000 per year.
  • The Employment Allowance will increase to £10,500 per year.

💡 Impact on You:

Although employees’ NICs remain unchanged, businesses face higher costs for hiring and retaining staff. This could result in lower pay rises, reduced bonuses, or even job cuts as companies adjust to the increased tax burden.

2. Income Tax and Personal Allowance

✔️ What’s Changing:

  • The income tax threshold freeze will end in April 2028, meaning it will rise with inflation after that point.
  • Until 2028, more people will move into higher tax bands as wages increase.

💡 Impact on You:

The freeze means you’ll pay more tax as your wages rise due to a phenomenon called fiscal drag. While the Government promises that tax thresholds will rise from 2028, this does nothing to help people struggling with rising costs right now.

3. Capital Gains Tax (CGT)

🔺 Key Changes:

  • Basic rate CGT increases from 10% to 18%.
  • Higher rate CGT increases from 20% to 24%.
  • The Business Asset Disposal Relief rate rises from 10% to 14% in 2025 and to 18% in 2026.
  • The Investors’ Relief lifetime limit drops from £10m to £1m.

💡 Impact on You:

If you plan to sell property, stocks, or other investments, you will pay more tax on any profits. Landlords and small business owners will be particularly affected.

4. Inheritance Tax (IHT) & Pensions

🔺 Major Changes:

  • Inheritance tax thresholds remain frozen until 2030.
  • Inherited pensions will now be taxed from April 2027.
  • Business and agricultural reliefs will only apply to assets under £1 million.

💡 Impact on You:

If you inherit property, pensions, or assets, you could pay more tax. Freezing IHT thresholds also means more estates will be taxed over time due to rising property values.

5. Cost of Living & VAT

🔺 What’s Changing:

  • VAT will be applied to private school fees from January 2025.
  • Fuel duty remains frozen.
  • A new gambling tax system is being proposed to simplify online betting taxes.

💡 Impact on You:

If your children attend private school, fees are likely to increase. However, the freeze on fuel duty helps keep petrol and diesel prices stable.

6. MPs’ Pay Rise: A Double Standard?

🔺 What’s Happening:

  • MPs are set to receive a 2.8% pay rise from April 2025.
  • Their salary will increase from £91,346 to £93,904.
  • This is above inflation, which currently stands at 2.5%.
  • Over the past 10 years, MPs’ salaries have increased by nearly £20,000.
  • MPs also claim expenses for staff, office costs, accommodation, and travel.

💡 Impact on You:

While ordinary workers face higher taxes and limited wage growth, MPs will receive yet another above-inflation pay rise. Many will see this as unfair, given the ongoing cost-of-living pressures faced by the public.

7. Stamp Duty & Housing

🔺 Property-Related Changes:

  • Stamp duty surcharge on second homes increases from 3% to 5%.
  • Stamp duty for companies buying property over £500,000 rises from 15% to 17%.

💡 Impact on You:

Buying a second home or investment property will cost more in tax. Landlords may pass these costs onto tenants, potentially raising rents.

8. Business & Employment

🔹 Business-Related Announcements:

  • The Corporation Tax rate is capped at 25%.
  • New tax reliefs for film and gaming industries.
  • A review of transfer pricing and international tax rules.

💡 Impact on You:

If you’re self-employed or own a business, expect more tax complexity and higher costs. However, if you work in the film or gaming industry, you may benefit from new tax reliefs.

9. Energy & Environmental Taxes

🔺 Green Taxation Measures:

  • The Oil and Gas Profits Levy (EPL) increases to 38% and extends to 2030.
  • A Carbon Border Adjustment Mechanism (CBAM) will be introduced in 2027, taxing certain imports like steel and cement.

💡 Impact on You:

These measures could lead to higher energy prices and increased costs for goods affected by carbon taxes.

10. HMRC & Tax Enforcement

🔹 Key Developments:

  • 5,000 new compliance staff will be recruited to tackle tax avoidance and fraud.
  • Interest rates on unpaid tax will increase.
  • Stronger powers for HMRC to collect debt.

💡 Impact on You:

Expect stricter tax enforcement, with HMRC cracking down on unpaid taxes and avoidance schemes.

Summary: How Will This Affect You?

📉 Negative Impacts:

  • Higher employer NICs could limit wage growth.
  • More tax on investments, inheritances, and pensions.
  • Stamp duty increases on second homes could raise rental prices.
  • More HMRC enforcement and penalties.

📈 Positive Impacts:

  • No increase in fuel duty.
  • Personal allowance will rise with inflation from 2028.
  • Some tax reliefs for small businesses and the creative industries.

💡 Final Thoughts:
While the Budget aims to provide long-term economic stability, many of its policies will result in higher tax burdens for working people. Employers will face increased costs, which could impact wage growth and job security. Those with investments, second homes, or inheritances will pay significantly more tax, while everyday expenses may continue to rise due to indirect tax changes.

What are your thoughts on the Autumn Budget? Do you think these changes will benefit or hurt working people?