Autumn Budget 2024

The Chancellor of the Exchequer, Rachel Reeves has today delivered the Autumn Budget 2024. Please see our summary below:

State Pension

 The government will maintain the State Pension Triple Lock for the duration of this parliament. The basic and new State Pension will increase by 4.1% from April 2025, in line with earnings growth, meaning over 12 million pensioners will gain up to £470 each in 2025-26.

 Personal tax allowances

 There is a continuation of the freeze on NI & income tax thresholds. The Chancellor is going to end that freeze from 2028. However, this means that the so called ‘fiscal drag’ will continue to pull some individuals into higher tax brackets until this date with just an inflationary rise in pay.

 ISA allowance

 There will be no change to the ISA allowance of £20,000 until April 2030.

 Jonathan Watts-Lay, Director, WEALTH at work, comments; “Its good news that the State Pension Triple Lock has been maintained which will see retirees benefit from the higher of wage inflation, CPI or 2.5%. However, continuing the freeze on income tax thresholds until 2028 will mean many will still end up in higher tax brackets until that time. I am also pleased that the ISA allowance has been maintained allowing people to save as much as they can in a tax efficient way.”

 Capital Gains Tax

It was announced that Capital Gains Tax (CGT) will increase. The basic rate of Capital Gains Tax will rise from 10% to 18%, and the higher rate from 20% to 24% respectively from 30 October 2024.

 Jonathan Watts-Lay, Director, WEALTH at work, comments; “Its really important employees make use of all their available allowances to be as tax efficient as possible. This can all seem confusing for many, so it is important that it is explained through a financial wellbeing programme so that they keep as much money for themselves as possible. This is particularly important for those who may benefit from Save As You Earn schemes as the CGT threshold has come down in the last couple of years from £12,000 to £3,000 and we now have an increase in the rate of tax as well, so this is a double hit! Employers can protect their employees from some of this pain by putting in place workplace savings vehicles such as a workplace ISA which has the functionality to move maturing shares in specie (so without the need to convert to cash) so ensuring up to £20k moves without a tax charge into an ISA. Once in the ISA there is no CGT paid on stock market gains and no tax is paid on dividends or interest.”

 Inheritance tax

 The inheritance tax threshold freeze will remain until 2030. It was also announced that inherited pensions will be brought into inheritance tax, including death benefits from April 2027.

 Jonathan Watt-Lay comments; “Whatever changes may lay ahead, it’s important for individuals to have a well-thought-out retirement plan, which considers all forms of retirement income and not just pensions. Many workplaces provide support to help their employees understand their options in the lead up to and at retirement such as providing financial education, followed by guidance and investment advice where appropriate to enable employees better financial outcomes at retirement.”

 Stamp duty on house purchase

 Jonathan Watt-Lay comments; “One thing that was not mentioned in the Budget is the planned reduction in the threshold for stamp duty in March 2025. As it stands this means that first time buyers will pay stamp duty on properties over £300k (currently £425k) and home movers will pay stamp duty on properties above £125k (currently £250k). This will mean a significant increase in tax for some.”