On 30th October, the UK government announced the Autumn Budget with a focus on economic growth and ‘more pounds in pockets.’
We will be taking a look at key takeaways from the Autumn Budget for employers and employees!
Minimum wage
• The living wage for over-21s, will increase by 6.7% to £12.21, equivalent to £1,400 a year for an eligible full-time worker.
• There will be a single-adult rate phased in over time to eventually equalise pay for under-21s. Currently, this is looking to rise to £10 an hour in April.
National Insurance
- Reeves has stated that employees will not directly pay more in National Insurance.
- However, National Insurance for employers is set to rise by 1.2% to 15% from April 2025.
- The government will also reduce a secondary threshold when contributions are due from £9,100 to £5,000.
Income tax
- The government plan to increase personal tax thresholds on income tax and national insurance in line with inflation from 2028-29.
Employment Allowance
- Employment Allowance is set to rise from £5000 to £10,500.
Business Rates
- There will be 40% business relief rates for hospitality, retail and leisure businesses.
Capital gains and inheritance tax
- Capital gains tax will be increased. The lower rate will be raised from 10% to 18%, and the higher rate from 20% to 24%. There will, however, be no increase on the 18% and 24% capital gains rate imposed on the sale of second homes.
- The government will extend a freeze on the threshold for inheritance tax to 2030, allowing £325,000 to be inherited tax free. From 2027 inherited pension pots will also be subject to the tax.
- Reeves has also announced a reform for business and agricultural assets so after £1m, those assets will attract inheritance tax of 20%.
Tobacco and alcohol
- Reeves has stated that draft duty will be cut by 1.7%, leading to a ‘penny off a pint’ in the pub.
- Not only this but tobacco taxes will rise by 2% above retail prices index (RPI) and duty on hand rolled tobacco will be increased by 10%.
We appreciate that change can be overwhelming and comes with questions. Don’t hesitate to get in touch if you would like advice and business support from the team at Future Cloud!
