On Wednesday, Rachel Reeves announced tax rises worth £40bn in her first budget as Chancellor and Labour’s first since 2010.
Below is a summary of the key announcements.
Increase to Employers National Insurance contributions
From April 2025, there will be an increase to the amount of NI contributions an employer must make. NI contributions will increase by 1.2% from the current rate of 13.8% to 15%, and the threshold from which employers begin to pay NI will be lowered from £9,100 to £5,000.
Although the NI threshold has been lowered, the amount of National Insurance a business can offset will increase as the employment allowance will change from £5,000 to £10,500.
Changes to Minimum Wage
The National Living Wage for workers over 21 will increase by 6.7% in April 2025 to £12.21 per hour. The National Minimum Wage for 18 to 20-year-olds will go up by 16% to £10 per hour.
Freeze on the Income Tax threshold will end in April 2028
The freeze on Income Tax and National Insurance thresholds will end in April 2028. From 2028 – 29, personal tax thresholds will be updated in line with inflation.
Capital Gains Tax
Capital Gains Tax rates for disposals on or after 30 October 2024 will increase from 10% to 18% at basic rate and higher rate from 20% to 24%. The rate for Business Asset Disposal Relief (BADR) will increase to 14% from 6 April 2025 and will increase again to match the lower main rate at 18% from 6 April 2026.
Corporation Tax
The main rate of Corporation Tax for businesses with taxable profits over £250,000 will remain at 25% until the next election.
HMRC Interest on Overdue Tax Payments
The interest rate applied to overdue tax payments will increase to encourage prompt payment.
The full 2024 Autumn Budget is available to read on the GOV website.
