Chancellor Rachel Reeves has today announced her first Budget and the Labour party’s first Budget since 2010. Below is a summary of the key points:

National Minimum Wage 

• National minimum wages to increase from April 2025:

Personal Tax

• The freeze on income tax and National Insurance Thresholds paid by employees will end in 2028
• Capital Gains Tax (CGT) will be increased. The lower rate will be raised from 10% to 18% while the higher rate will rise from 20% to 24%.
• Inheritance Tax threshold freeze will be extended from 2028 to 2030, allowing £325,000 to be inherited tax free
• Unspent pension posts will also be subject to IHT from 2027
• There will be tax raises worth £2bn from reforming reliefs for business and agricultural assets. After £1m, those assets will attract inheritance tax of 20%
• Exemptions when inheriting farmland to be made less generous from 2026

National Insurance

• Employers NI rate increase from 13.8% to 15%
• Businesses will now pay NI on worker’s earnings above £5,000 from April. This is currently £9,100.
• The employment allowance which allows companies to reduce their NI liability is to increase from £5,000 to £10,500

Corporation Tax

• Main rate of corporation tax, paid by companies on taxable profits over £250,000 will stay at 25% until the next election
• Tax paid by private equity managers on share of profits to rise from up to 28% to up to 32% from April 2025

Transport

• The £2 cap on single bus fairs in England will rise to £3 from January 2025
• The 5p cut on fuel duty on petrol and diesel will be kept for another year to April 2026. This was originally due to end in April 2025
• Air Passenger Duty will increase by up to £2 on each economy short-haul flight. Private jet flights to go up by 50%, up to £450 per passenger for a flight
• There will be a £500m increase in the roads budget for 2025 to target potholes

Housing

• Stamp duty, paid on second home purchases in England and Northern Ireland to go up from 3% to 5%
• Current affordable homes budget which runs until 2026, boosted by £500m
• Social housing providers to be allowed to increase rents above inflation under multi-year settlement

Education

• VAT will be brought in on private school fees in January 2025
• The Department for Education will receive £6.7bn, including £1.4bn to rebuild schools in the greatest need.

Alcohol and Tobacco

• Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation
• Tax on draught alcoholic drinks cut by 1.7%
• Tax on tobacco to increase by 2% above inflation, 10% above inflation for hand-rolling tobacco as an incentive to stop smoking
• A levy will be implemented on vapes, which will be increased in line with tobacco

Our full in-depth budget report will be available tomorrow 31/10. For more information on how the announcement may affect you, please contact us.