Delivered by Chancellor Rachel Reeves, the 2024 Autumn Budget brings key tax updates, economic forecasts and public spending proposals for the upcoming financial year. This Budget is especially significant following a change in government. Explore how these changes might impact your personal and business finances in our in-depth guide.
Back to NEWSChange can often feel unsettling and as the 2024 Autumn Budget unfolds, many of us are left wondering how the reforms will shape our financial future. In the Labour Manifesto they outlined tax-raising measures worth around £9bn, while promising not to increase key taxes on income, national insurance or VAT for working people. They also pledged not to raise corporation tax on businesses. However, Chancellor Rachel Reeves faces the challenge of addressing a £22bn financial shortfall, inherited from the previous government. To fill this gap and avoid austerity, Reeves planned to raise £40bn annually through a mix of tax increases and spending cuts, aiming to balance day-to-day spending with tax revenues while protecting key services from further cuts. In this Guide we explore all the measures that Rachel Reeves has bought in place and the ripple effects that are likely to be felt by individuals and businesses. We’ll break down the key highlights of the 2024 Autumn Budget and show you how these changes could influence your financial strategies, empowering you to take control and make informed decisions.
The Budget often raises more questions than it answers, especially with so many changes on the horizon. From quirky traditions like the Chancellor’s red box to more pressing concerns like how the Budget will affect your taxes or business, it’s important to understand the details behind the headlines. Take a scroll through some of the most frequently asked questions about the Budget.
Reeves announced £40bn of tax increases to rebuild public services and boost long-term growth. Here we give you the high level changes before expanding on how these will impact on your finances.
Whilst Reeves announced that income tax and NI thresholds will rise with inflation from 2028-29, income tax thresholds are still frozen until 2028. This freeze, initially introduced by the Conservatives, was back then called a “stealth tax,” by Labour because it increases the tax burden without directly raising tax rates. This means that a million more people are in higher tax brackets.
Fiscal drag happens when tax thresholds are frozen or rise slower than inflation. As wages increase with inflation, more people are pulled into higher tax brackets even though their purchasing power hasn’t really improved. For example, a small pay rise might push you into a higher tax bracket, meaning you pay more tax, even if your standard of living stays the same. This “stealth tax” boosts government revenue without making obvious changes to tax rates.
Fiscal drag can reduce your disposable income without you even knowing it. This means you end up with less spending power because your tax bill grows, despite your wage not keeping up with the rising cost of living. Over time, this can gradually erode your financial position, making it harder to keep up with daily expenses.
1. Maximise tax allowances: Make the most of your personal allowances, put spare income you don’t need in the near future in to ISAs and consider increasing your pension contributions to reduce that amount of income that is susceptible to tax.
2. Review your tax position annually: Regularly reassess your financial situation to ensure you take advantage of tax-saving opportunities. Also watch out for the impact inflation has on your cash savings. There are also ways business owners can take money out of the business tax efficiently.
3. Plan for salary increases: Be aware of how pay rises may affect your tax bracket. If you have children and are close to earning over £100,000 this will impact on childcare support. Someone can reduce their income by increasing pension contributions. There are also other tax-efficient investments that can reduce income tax.
Another tax that has been frozen until 2030 is inheritance tax. However, a big change is that pensions will now be included as part of an estate that is subject to inheritance tax. This will take place from April 2027.
Passing on your estate to a spouse: Inheritance tax only affects around 4% of families, as most estates fall below the taxable threshold. Anything left to a spouse or civil partner can be done so entirely tax-free, even if the estate is worth millions. However, this benefit only extends to couples who are in a civil partnership or married.
Passing inheritance on to anyone else: When passing on inheritance to other people, each person has a £325,000 tax-free inheritance allowance, this is also known as the nil-rate band. When a partner dies they can pass their nil-rate band onto their spouse, doubling the nil-rate band to £650,000.
Passing inheritance on to children: A couple can give away a home, up to the value of £500,000, to their children or grandchildren. This includes adopted, fostered or stepchildren. This is known as the residence nil-rate band. This would leave £175,000 of the £325,000 tax-free allowance left. Which means that parents can pass up to £1 million of assets, including the family home, to children or grandchildren tax free. If an estate exceeds this, the portion above the threshold originally was taxed at 40%.
Reeves said she will look to reform Agricultural Property Relief and Business Property Relief around 2027. From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all. For assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%.
Estate planning is complicated and how to plan for your loved ones after death is emotional. A change in inheritance tax rates or exemptions could have a significant impact on your legacy. Whether you have children or not, you will want to leave the wealth you have accumulated to someone significant without them having the tax burden. To minimise tax liabilities and protect your legacy, it’s important to seek financial advice.
Some of the inheritance tax strategies a financial adviser could look at to reduce the tax burden on your estate are:
Gifting: Giving away assets during your lifetime can reduce the size of your estate, provided you live for seven years after the gift is made.
Use of Trusts: Placing assets in a trust can protect them from inheritance tax.
Pension Planning: Pension funds are usually exempt from inheritance tax.
Charitable Donations: Leaving part of your estate to charity can reduce the overall tax rate.
Insurance: Some insurance policies can be written in trust, the pay out goes directly to your beneficiaries without being included in your estate. This can help cover any inheritance tax.
Business Relief: If you own your own business, certain assets might qualify for inheritance tax relief.
Joint Ownership: Holding assets jointly with your spouse can ensure they transfer tax-free upon death.
Professional financial advice, with a financial plan bespoke to you is key to navigating inheritance tax legally and effectively.
Before the Autumn Budget there was speculation around the removal of tax free cash, after it was rumoured the Chancellor asked one of the major pension providers about the impact of capping the pension tax-free lump sum at £100,000. However, for now, we have escaped that change. But with pensions now becoming part of someone’s estate, you will have have approached retirement and estate planning based on the existing rules. Now, the value of pension pots will be added to the total value of other assets within someone’s estate. This will push people closer to or over the IHT threshold of £325,000. There is no doubt that this will make people think about whether they want to access more of their money in retirement. However there are ways to mitigate the impact of inheritance tax.
We are still waiting to receive confirmation around the rules of these changes and how this impacts inheritance tax and this is a stark reminder that for those approaching retirement, it is essential that you constantly re-evaluate your retirement strategy and ensure that you have plenty saved. Otherwise, when big changes happen, you could be at risk of making rash decisions. Any good retirement adviser will always take a balanced approach when it comes to retirement planning, ensuring clients don’t compromise their future security. Below are just three things you could consider:
A balanced approach will help ensure your retirement strategy remains secure and tax-efficient, even amidst changing rules. For more information on planning for the future check out our Guide to Retirement Planning.
Capital Gains Tax (CGT) is charged on the profit made from selling an asset that has increased in value. This could be a property that is not your main home, shares, a business or personal possessions worth over £6,000 (excluding cars). There is a tax-free allowance of £3,000 and after this, basic rate taxpayers used to pay 10% or 18% for residential property. Higher and additional rate taxpayers used to pay 20% or 24% on residential property.
What’s changed? Rachel Reeves announced that CGT has increased in line with the lower rate of Capital Gains Tax rising from 10% to 18%, and the higher rate from 20% to 24%. The rates on residential property will remain at 18% and 24%. Additionally, Reeves says she will increase Capital Gains Tax rates on carried interest to 32% from April 2025 and deliver further reforms from April 2026.
When it comes to a business sale, at the moment, business asset disposal relief still appears to remain at 10%, on the first £1 million of lifetime gains. This is particularly valuable since the higher CGT rate now stands at 24%, and the sale of a business could move even basic-rate taxpayers into the higher bracket. Each individual can claim the £1 million allowance, making it a personal limit rather than applicable per business sold. Gains that exceed this £1 million threshold will be taxed at the full CGT rate of 24% if your combined income and gains surpass £50,270 in the 2024-25 tax year, this is £43,662 in Scotland.
To mitigate CGT, like inheritance tax, you can work alongside a financial adviser who will keep your tax liabilities as low as possible. People and businesses need to ensure they have a tax efficient financial plan in place, using strategies like:
Annual Allowance Management: Advisers can guide you in making use of the annual tax-free allowance by spreading asset sales over multiple years.
Transferring Assets to a Spouse: By shifting assets to a spouse who might be in a lower tax bracket, you can reduce the CGT liability when selling.
Tax-Efficient Investments: Advisers may suggest holding investments in tax-efficient wrappers, like ISAs or pensions, where gains are exempt from CGT.
Using Losses to Offset Gains: Capital losses from other investments can offset taxable gains, reducing the overall CGT liability.
Timing of Asset Sales: Advisers can help you strategically time the sale of assets, either to coincide with a period when your income is lower or to make the most of future tax allowances.
By implementing some or all of these tax efficient strategies, a financial adviser can legally and efficiently reduce the impact of CGT on your overall wealth.
The Autumn Budget introduces significant changes impacting business owners, particularly through the adjustments in National Insurance and tax relief measures.
While some changes, like the increased employment allowance and stable corporation tax, may benefit business owners, the rise in National Insurance and reduced business rate relief will require adjustments in budgeting and workforce planning.
1. Just get started: In times of change it is easy to feel uncertain, but we will let you in to a little secret, this is also the perfect moment to take control of your financial future. You can start by reviewing your financial plan. Take a look at whether your current strategies are aligned with the potential shifts in taxes and pensions. It’s worth asking the question: “Am I prepared for what’s next?”. You can access our 2024/25 tax tables and tax planning guide to ensure that you are utilising available tax allowances as part of this process.
2. Collaborate with people in the know: You also don’t have to navigate this alone. Whether you seek advice from Unividual or another Chartered Financial Planner, a quality advice firm focused on client outcomes and long-term relationships will ensure you get expert guidance tailored to your needs. We’ve helped countless individuals and businesses adapt to new policies and you too could benefit from that. Financial Advice is more affordable than most people realise, read up on how financial advisers charge for their services.
3. Stay informed: The Autumn Budget is just the beginning and keeping up with developments will help you stay ahead. You can stay connected with our insights in our Money Matters Newsletter on LinkedIn or you can keep an eye on our articles which are circulated throughout our social media channels.
In return for paying taxes, we all hope to see investments that strengthen communities, improve services and drive growth across key sectors. The latest Autumn Budget from Rachel Reeves presents a range of funding initiatives that aim to do exactly this:
A 10-year NHS improvement plan includes a £22.6 billion increase to the day-to-day health budget and an additional £3.1 billion for capital projects. These funds aim to reduce waiting lists, expand healthcare capacity, and modernise facilities. This budget lays out a vision focused on strengthening public services, regional development, and sustainable innovation, supporting long-term economic resilience and community wellbeing across the UK.
The core school budget will rise by £2.3 billion, enabling schools to hire teachers in essential subjects. Funding for breakfast clubs will also triple, which aims to support disadvantaged students by ensuring they have access to meals before starting their school day. An additional £300 million will go to further education, addressing skills gaps and supporting vocational training that complements traditional academic routes.
The Ministry of Defence will see a £2.9 billion increase and the government has pledged £3 billion annually in military support for Ukraine, affirming the UK’s commitment to international security and partnership.
Greater Manchester and the West Midlands will be the first regions to receive integrated settlements, empowering mayors with control over budget allocation. This is designed to support local economic growth, infrastructure improvements and community initiatives. Aerospace, automotive and life sciences industries are set to benefit, with £1 billion allocated to aerospace, over £2 billion for the automotive sector and £520 million earmarked for life sciences. Additionally, more than £20 billion will be invested in research and development across fields such as engineering, biotechnology and medical sciences, with a dedicated £6.1 billion for core research funding.
A £5 billion investment will boost affordable housing initiatives, including expanding the Affordable Homes Programme to £3.1 billion. The government also promises £3 billion in support for small developers and site renovations, creating new housing projects, such as 2,000 new homes at Liverpool’s Central Docks. Projects like the Trans-Pennine upgrade and East-West Rail are set to advance, connecting major cities and improving regional transport. Additionally, £500 million will be directed towards road maintenance, including a commitment to repairing one million potholes annually.
Eleven commercial-scale green hydrogen projects will launch across the UK, helping reduce carbon emissions. Communities such as Bridgend and East Renfrewshire will be among the first to host these pioneering energy initiatives. Following the Grenfell Tower tragedy, £1 billion will be invested in the removal of dangerous cladding on residential buildings, enhancing fire safety standards.
Things are constantly evolving and we are yet to see the full details of changes to pensions around inheritance or the changes to capital gains tax. If you are interested in working alongside a financial adviser, they will proactively manage your finances around these changes but empower you with all the tools you need to sleep soundly at night. When you are ready to reach out get in touch with us. In the meantime, please don’t hesitate to read up on some client case studies, so you can hear first hand the impact financial advice can have on someone’s life.
Author: Cherie-Anne Baxter-Blyth, Marketing Director
Date Written: 30th October 2024
Updated: 30th October 2024
Approver: Quilter Financial Limited 30th October 2024
Risk Warnings:
The value of pensions & investments and the income they produce can fall as well as rise. You may get back less than you invested.
Tax planning, Estate Planning & Inheritance Tax planning are not regulated by the Financial Conduct Authority
Tax treatment varies according to individual circumstances and is subject to change.
The figures in this article are correct on the day the article was published or updated.
