In arguably the most anticipated budget announcement in years, the Autumn Budget provided an update on the government’s plans for the economy. This was Labour’s first budget in nearly 15 years and the planned changes dominated the domestic news for weeks.
In today’s Autumn budget, Rachel Reeves has announced a multitude of changes - see the summary below to see how you are impacted:
National Living Wage / Minimum Wage
The National Minimum Wage (NMW) for those 21 and over, officially known as the National Living Wage and wages for those aged 16-20 are both changing from April 2025.
What do the announced changes mean for you?
The NMW is going up from April 2025 and the table below outlines the changes.
| NMW Rate | Increase (£) | Percentage Increase | |
|---|---|---|---|
| National Living Wage (21 and over) | £12.21 | £0.77 | 6.7 |
| 18-20 Year Old Rate | £10.00 | £1.40 | 16.3 |
| 16-17 Year Old | £7.55 | £1.15 | 18.0 |
| Apprentice Rate | £7.55 | £1.15 | 18.0 |
Source: www.gov.uk
Freeze on Income Tax thresholds
The amount anyone can earn before paying tax is £12,570 a year. The Conservative government froze this threshold until 2028.
What could the announced changes mean for you?
Labour will not extend this freeze and from 2028 these thresholds will increase in line with inflation meaning you can earn more before you pay income tax.
Employers’ National Insurance Contributions (NICs)
Employers pay NICs for most workers earning more than £9,100 a year. The amount they pay is the equivalent of 13.8% of the employee’s earnings above £9,100 up to the Upper Earnings Limit (UEL) of £36,244. Above the UEL, employers pay 2%.
What could the announced changes mean for you?
Following the changes announced today, if you employ staff then your wage bill will increase.
Employers’ NICs will now move to 15% from April 2025. It is also now payable once workers earn £5,000 rather than the current £9,100.
As an employee, whilst there isn’t a direct impact, you may find your employer makes changes in the future to reduce their NICs bill - such as reduce or remove any pay increases.
Capital Gains Tax (CGT)
Capital gains tax is a tax on any profit you make when you sell or "dispose of" an asset, such as shares that are not part of an ISA. The amount you can earn in profit every tax year is £3,000.
Before today’s announcement, basic rate taxpayers (who pay 20% tax on their income) paid 10% capital gains tax. A higher rate taxpayer (who pays 40% tax normally) paid 20%. The rates were higher if, for example, a landlord sold a rental property.
What could the announced changes mean for you?
The new rates of CGT are now 18% for basic rate taxpayers, and 24% for higher rate taxpayers.
Inheritance Tax (IHT)
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.
There’s normally no IHT to pay if either the value of your estate is below the £325,000 threshold or if you leave everything above the £325,000 threshold to your spouse, civil partner or a charity. Further allowances are also available if you leave your home to your children - any unused allowances can also be passed to your spouse.
What could the announced changes mean for you?
Pensions will now form part of your estate when it comes to IHT. That means your pension will now count towards the threshold limit.
The thresholds have also been frozen until 2030.
Fuel Duty
The 5p cut introduced last year will remain in place.
What could the announced changes mean for you?
There will be no additional fuel duty added to the cost of petrol and diesel now and into next year.
Carers Allowance
Introduced in 1976, the amount a Carer can now earn has been increased.
What could the announced changes mean for you?
A carer can now earn £10,000 a year whilst still being able to benefit from the Carers Allowance.
Summary
A significant number of changes were announced in the first Labour Autumn budget for over a decade.
With the increase in the National Minimum Wage a number of people will find more money in their pocket from April 2025.
Amongst those who may also benefit from the Autumn budget are parents with young children given the increased investment in after school clubs, albeit any good news here may be offset by personal allowances still being frozen until 2028.
Those who own assets are invariably much worse off as a result given the changes in CGT and pensions, as are companies who face an increase in NICs payments therefore raising their costs.
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Remember the content provided in this article is for information purposes only and should not be considered as advice.
