Autumn Budget: Key Personal Changes
Speaking of a Budget that blended optimism with tough choices, Chancellor Rachel Reeves said:
“This is a changed Labour party, and we will restore stability to our country again. The scale and seriousness of the situation that we have inherited cannot be underestimated.”
Here’s a glance through the key measures that will affect individuals across the country:
National living wage rising by 6.7% to £12.21 per hour.
Working-age benefits increasing by 1.7% in line with inflation.
State pension rising by 4.1% under Triple Lock.
CGT rates increasing to 18% and 24%.
IHT thresholds frozen until 2030.
Fuel duty freeze and 5p cut extended for 12 months.
£1bn extension to Household Support Fund.
Carer’s allowance earnings limit increased significantly.
Universal Credit debt repayments capped at 15%.
NATIONAL LIVING WAGE AND MINIMUM WAGE
The Government is boosting wages for the low-paid by accepting the Low Pay Commission’s recommendations in full.
The national living wage will increase by 6.7% to £12.21 per hour from April 2025, representing an increase of over £1,400 to the annual earnings of a full-time worker and benefiting over 3 million low-paid workers across the UK.
The national minimum wage for 18 to 20-year-olds will rise by 16.3% to £10.00 per hour from April 2025, marking the greatest increase ever in cash and percentage terms. The Government is also increasing the minimum wage for under-18s and apprentices to £7.55 per hour.
Some 200,000 young people around the UK are forecast to see their wages increase by £2,500 annually.
STATE PENSION
The Government has committed to maintaining the State Pension Triple Lock for the duration of this Parliament. This means the basic and new state pension will continue to be uprated annually by the highest of earnings growth, price inflation, or 2.5%.
In line with recent earnings growth figures, the basic and new state pension will increase by 4.1% from April 2025. As a result, over 12 million pensioners will receive up to an extra £470 per year in their state pension payments.
WORKING AGE BENEFITS
The Autumn Budget has confirmed that working-age benefits, including Universal Credit, will be increased to match the September 2024 Consumer Price Index (CPI) inflation rate of 1.7%.
This means the 5.7 million families receiving Universal Credit will experience an average annual increase of £150 to their benefit payments in 2025/26 due to this uprating.
CAPITAL GAINS TAX RATES
Effective from 30 October 2024, CGT rates will be increased as follows:
• The lower rate will rise from 10% to 18%.
• The higher rate will increase from 20% to 24%.
Reeves was quick to remind everyone that CGT rates remain lower than those in comparable EU countries.
INHERITANCE TAX MEASURES
Firstly, IHT thresholds, including the nil- rate band and the residence nil-rate band, have been frozen at their current levels until April 2030.
This means the nil-rate band will remain at £325,000, and the residence nil-
rate band will stay at £175,000 for an additional two years.
UNUSED PENSION FUNDS
From April 2027, unused pension funds will be subject to IHT. This aims to prevent individuals from using pensions to accumulate wealth and pass it on to their beneficiaries without incurring IHT.
AGRICULTURAL AND BUSINESS PROPERTY RELIEF
Both agricultural property relief and business property relief will be reformed from April 2026. While the existing nil-rate bands and exemptions will continue to apply, the current 100% relief rate will only be available for the first £1m of combined agricultural and business assets.
Any value above this threshold will be subject to a reduced relief rate of 50%, resulting in an effective rate of 20%. This change ensures that family farms and businesses are protected while ensuring that the wealthiest estates pay their fair share of tax.
The Government estimates these measures will affect a small proportion of estates each year, with the pension fund change impacting around 8% of estates and the agricultural and business property relief reform affecting approximately 0.3% of estates.
STAMP DUTY
The Budget increased the Higher Rates for Additional Dwellings (HRAD) from 3% to 5%, effective 31 October 2024. So, for example, if the normal SDLT rate on a property purchase is 5%, someone buying a second home or buy-to-let investment would now pay 10% in total (the normal 5% rate plus the 5% HRAD surcharge). In addition, the single SDLT rate charged on purchases of dwellings over £500,000 by corporate bodies will rise from 15% to 17%.
The clear intent is to lessen the appeal for investors and businesses to acquire residential properties, compared to owner-occupiers and first-time buyers.
NON-DOMICILE TAX STATUS REFORM
In keeping with this Labour Government’s intention to close tax loopholes, the 2024 Autumn Budget announced a major overhaul to the tax treatment of non-domiciled individuals (non-doms) in the UK.
From 6 April 2025, the Government will abolish the concept of non- domicile tax status and replace it with a new, modernised tax system based on residence.
The new residence-based regime will remove the concept of domicile from the tax system, aiming to ensure that all individuals who make their home in the UK pay their taxes here.
AIR PASSENGER DUTY (APD) CHANGES
For 2026/27, the Government will adjust all APD rates to ensure they keep pace with inflation:
£1 more for those taking domestic flights in economy class, £2 more for those flying to short-haul destinations in economy class.
Long-haul economy class passengers will see a £12 increase in APD.
APD for those travelling in premium economy and business class will rise relatively more.
Moreover, the higher rate of APD, which currently applies to larger private jets, will increase by an additional 50% in 2026/27.
VAT ON PRIVATE SCHOOL FEES
The Government announced that from 1 January 2025, all education services and vocational training provided by private schools in the UK for a fee will be subject to Value Added Tax (VAT) at the standard rate of 20%.
Under the current rules, most education services provided by private schools are exempt from VAT. Business rates relief for private schools has also been removed from April 2025.
The new rules are expected to raise an additional £1.8bn per year by 2029/30.
Download a full copy of the report here.