Chancellor Rachel Reeves’ Autumn Budget 2024 was widely anticipated by many finance experts and there are clearly some big changes which need to be navigated.
In our latest blog we summarise some of the major changes
- National Minimum Wage Increase
The National Minimum Wage is set to rise by 6.7%, reaching £12.21 per hour. This increase aims to boost earnings for low-income workers, enhancing their purchasing power and financial stability. However, businesses may face higher wage bills, which could lead to increased prices for goods and services.
- Adjustments to Income Tax Thresholds
Income tax thresholds will now rise in line with inflation, starting in 2028. This change is designed to prevent ‘fiscal drag,’ where individuals are pushed into higher tax brackets due to inflationary wage increases. By aligning thresholds with inflation, taxpayers can avoid unintended tax hikes, potentially preserving more of their income.
- Inheritance Tax Reforms
The Budget introduced changes to inheritance tax, particularly affecting rural estates. From April 2026, estates valued over £1 million will be subject to a 20% inheritance tax. This policy aims to increase tax revenues but may impact the transfer of family-owned farms and properties, potentially leading to the sale of assets to cover tax liabilities.
- Taxation on Investments
The lower rate of capital gains tax on the sale of assets will increase from 10% to 18%, and the higher rate will go from 18% to 24%. This change affects investors, as profits from the sale of investments will be subject to higher taxes, potentially impacting investment strategies and returns.
- Impact on Consumer Prices
Businesses are facing increased costs due to higher National Insurance contributions and wage bills. Major retailers have warned that these additional expenses may lead to higher prices for consumers and potential job losses. Individuals should be prepared for possible increases in the cost of goods and services.
- Public Service Investments
Significant investments are planned for public services, including a £22.6 billion increase in the NHS budget and £6.7 billion for education. These investments are intended to improve healthcare and education services, potentially enhancing quality of life and future opportunities for individuals.
- Housing Initiatives
The government plans to allocate £5 billion for housing investment in the fiscal year 2025–26, focusing on increasing the availability of affordable housing. This initiative aims to make homeownership more accessible, particularly for first-time buyers, and address housing shortages.
- Changes to Benefits and Allowances
The Budget includes adjustments to certain benefits and allowances, such as the removal of winter fuel payments for pensioners not receiving pension credit. This change may affect the financial planning of retirees, who should review their budgets to accommodate potential increases in heating costs.
Conclusion
The Autumn Budget 2024 introduces several measures that will affect individuals’ finances, from wage increases and tax adjustments to changes in benefits and public service investments.
It’s essential to assess how these changes impact your financial situation and consider adjustments to your financial planning strategies.
At Two10 Investment Services, we’re here to help you navigate these changes and plan for a secure financial future.
Get in touch today to arrange a free consultation.