Budget 2024 – Property, Wills, And Employment Changes
The Autumn Budget 2024, presented by Rachel Reeves, the UK’s first female Chancellor of the Exchequer, is set against the backdrop of a newly elected Labour government, promising a “decade of national renewal”. Ms Reeves has repeatedly warned that taxes will need to increase to fill the “£22 billion black hole in public finances”.
In this article, we provide a brief breakdown of some of the changes that may affect our clients, especially in the areas of employment, Wills and estates, and property. If you have any questions, please do not hesitate to call our friendly team on 02476 231000 or use our contact form for assistance.
National Insurance Adjustments
The budget introduces a notable change in employer contributions to National Insurance, raising it by 1.2 percentage points to 15% from April 2025. Additionally, the threshold at which contributions are due will drop from £9,100 to £5,000. This adjustment is expected to raise £25 billion annually by the end of the parliamentary term. For employees, this means no immediate increase in direct contributions, as the adjustment primarily targets businesses.
However, this may have a ripple effect on job growth, especially among smaller businesses struggling to cover increased expenses. While the funds are earmarked to improve public services, some employers may feel pressured by the additional cost, potentially affecting hiring practices.
Changes to Income Tax Thresholds
To ensure that working people are not burdened by higher tax bands due to inflation, income tax and National Insurance thresholds will be adjusted in line with inflation starting from 2028-29. This means that taxpayers will avoid a “stealth tax” effect, where they drift into higher bands purely due to inflationary increases in income, a move Reeves insists upholds Labour’s commitment to protect working people’s earnings.
Minimum Wage Increase
One of the more direct impacts on ordinary people is the rise in the National Living Wage by 6.7% to £12.21 per hour, meaning a full-time minimum wage worker could see an increase of around £1,400 per year. This move aims to support low-wage earners in facing rising costs, a widely welcomed initiative that Labour positions as a step toward closing the wage gap. Yet, businesses have expressed concern that this change could lead to job cuts or reduced hours to manage higher payroll costs, an outcome that may temper the budget’s positive intentions for lower-income workers.
Capital Gains and Inheritance Tax Adjustments
The budget increases capital gains tax, with the lower rate raised from 10% to 18% and the higher rate from 20% to 24%, while exempting gains from second homes from additional hikes. For those selling assets, this change could mean paying more on profits, but the increases remain relatively modest compared to international standards.
On inheritance tax, the Chancellor has extended the freeze on the tax-free threshold of £325,000 to 2030 and has introduced new rules targeting business and agricultural assets, imposing a 20% inheritance tax on values above £1 million. This reform is likely to affect those with substantial estates, though the average person may see little change in their inheritance planning.
Stamp Duty Increases
As expected, stamp duty is to rise on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property, from 3% to 5% from 31 October 2024.
Housing Investment and Affordable Homes
The budget allocates £5 billion toward increasing the supply of affordable housing, including hiring additional planning officers to streamline housing projects. A reduction in right-to-buy discounts and the retention of proceeds from council house sales aim to give local authorities the resources to reinvest in public housing.
Final Thoughts
The October 2024 budget presents a series of carefully calibrated measures designed to improve the UK’s economic stability while enhancing public services. For people who do not have second homes, buy-to-lets, or significant assets such as stocks and shares, this budget will bring about little change. However, SME owners who are looking to grow their business may hold fire for the moment until the impact of the increases in National Insurance payments and the Minimum Wage are understood.
Although there were fears that the seven year rule in relation to inheritance tax and the residential home nil rate band would be scrapped, this has not occurred. This will come as a relief to those who wish to pass property and assets down to their children in their Will.
Our team is available to discuss any questions you have on how the Autumn Budget may affect your private and professional life. For a more detailed report, please view our sister firm’s newsletter here.
If you require legal advice, please call our office today on 02476 231000 or use our contact form for assistance.
Please note that this article is for information purposes only and does not constitute legal advice.
